I 
108TH CONGRESS 
1ST SESSION 
H. R. 945
To exercise authority under article I, section 8, clause 3 of the Constitution 
of the United States to clearly establish jurisdictional boundaries over 
the commercial transactions of digital goods and services conducted 
through the Internet, and to foster stability and certainty over the 
treatment of such transactions. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 26, 2003
Mr. STEARNS (for himself, Mr. TOWNS, Mr. BASS, Mr. DEAL of Georgia, and 
Mr. WALDEN of Oregon) introduced the following bill; which was referred 
to the Committee on Energy and Commerce, and in addition to the Com-
mittee on the Judiciary, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To exercise authority under article I, section 8, clause 3 
of the Constitution of the United States to clearly estab-
lish jurisdictional boundaries over the commercial trans-
actions of digital goods and services conducted through 
the Internet, and to foster stability and certainty over 
the treatment of such transactions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Jurisdictional Cer-
tainty Over Digital Commerce Act’’. 
SEC. 2. CONGRESSIONAL FINDINGS. 
The Congress finds that—
(1) the Internet is increasingly used to conduct 
commercial transactions in digital goods and digital 
services wholly deliverable by and on the Internet; 
(2) jurisdictional certainty is an important cata-
lyst to further advancement of electronic commerce; 
(3) digital commercial transactions in digital 
goods and digital services are inherently interstate in 
nature; 
(4) State regulation of such digital commercial 
transactions creates significant and harmful burdens 
on interstate commerce; 
(5) State regulation of digital commercial trans-
actions in digital goods and digital services will seri-
ously impede the growth of such transactions, de-
creasing the viability of electronic commerce as an 
alternative instrument or channel of commerce; and 
(6) while other types of transactions may de-
serve similar treatment, digital commercial trans-
actions in digital goods and digital services are the 
type of transactions that most clearly deserve protec-
tion from disparate, uncoordinated, and inconsistent
efforts by the States to regulate Interstate com-
merce. 
SEC. 3. FEDERAL AUTHORITY TO REGULATE COMMERCE IN 
DIGITAL GOODS AND SERVICES. 
(a) IN GENERAL.—Responsibility and authority to 
regulate digital commercial transactions is reserved solely 
to the Federal Government. 
(b) PROHIBITION
OF
STATE
REGULATION.—No 
State or political subdivision thereof may enact or enforce 
any law, rule, regulation, standard, or other provision hav-
ing the force or effect of law that regulates, or has the 
effect of regulating, digital commercial transactions. 
(c) PROHIBITION OF DELEGATION TO STATES.—Any 
responsibility or authority to regulate digital commercial 
transactions that, pursuant to subsection (a), is retained 
by the Federal government may not be delegated, by any 
Federal agency or officer, to any State or political subdivi-
sion thereof. 
(d) INAPPLICABILITY TO NON-DIGITAL COMMERCIAL 
TRANSACTIONS.—This Act may not be construed—
(1) to modify, impair, or supersede, or to au-
thorize the modification, impairment, or superseding 
of, any authority that any State or any political sub-
division thereof may have to regulate any commer-
cial transaction that is not a digital commercial 
transaction; or 
(2) to establish any authority for a State or po-
litical subdivision of a State to regulate any commer-
cial transaction that is not a digital commercial 
transaction, in contravention of any limitation on 
such authority established under law (including any 
statute, regulation, rule, or judicial decision). 
(e) 
INAPPLICABILITY
TO
STATE
COMMERCIAL 
CODE.—This Act may not be construed to limit, alter, su-
persede, or otherwise affect any requirement under the 
Uniform Commercial Code, as in effect in any State. 
(f) DEFINITIONS.—For purposes of this section: 
(1) DIGITAL GOOD.—The term ‘‘digital good’’ 
means any good or product that is transferred or de-
livered by means of the Internet. 
(2) DIGITAL COMMERCIAL TRANSACTION.—The 
term ‘‘digital commercial transaction’’ means a com-
mercial transaction for a digital good or digital serv-
ice that is carried out in its entirety by means of the 
Internet. 
(3) DIGITAL SERVICE.—The term ‘‘digital serv-
ice’’ means any service that is conducted or provided 
by means of the Internet. Such term does not in-
clude any telecommunications service, as such term
is defined in section 3 of the Communications Act of 
1934 (47 U.S.C. 153), or the business of insurance. 
(4) INTERNET.—The term ‘‘Internet’’ means 
collectively the myriad of computer and tele-
communications facilities, including equipment and 
operating software, which comprise the inter-
connected world-wide network of networks that em-
ploy the Transmission Control Protocol/Internet 
Protocol, or any predecessor or successor protocols 
to such protocol, to communicate information of all 
kinds by wire or radio. 
(5) REGULATE.—
(A) IN
GENERAL.—The term ‘‘regulate’’ 
includes, with respect to a digital commercial 
transaction, taking any governmental action 
that restricts, prohibits, limits, or burdens, or 
imposes any obstacle or interference with, such 
a transaction. 
(B) EXCLUSION.—Notwithstanding sub-
paragraph (A), such term does not include tak-
ing any government action, pursuant only to 
specific statutory authority for such action 
under the laws of such State and only on an in-
dividual case-by-case basis, in order to protect
a party to a digital commercial transaction 
from—
(i) a specific and identified threat to 
the health or physical safety of such party; 
or 
(ii) fraudulent or criminal activity 
against such party. 
This subparagraph may not be used by a State 
or political subdivision thereof to regulate, in a 
general manner, the parties to a digital com-
mercial transaction.
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