The Internet's Wild West days are over.

What once was a bastion of free-thinking bloggers and mavericks who gave us downloadable music, is now becoming one of the most heavily regulated, and litigated, spaces on Earth, experts at an Ottawa conference on Internet law said yesterday.

"It's this ever-expanding concentric circle in terms of how they're trying to regulate online activity," said Michael Geist, a professor of Internet law at the University of Ottawa.

"Everyone has the potential to be regulated."

As fast as new laws are being drafted to shut them down, spammers, hackers and online gambling czars are simply packing up and disappearing into the next, less vigilant jurisdiction. Music and movie file sharers, meanwhile, can find plenty of loopholes to let them evade prosecution.

So instead, lawyers are training their guns on the middlemen. To shut down a Canadian online pharmacy, for instance, a drug company might sue the courier or trucking firm that carries products across the international border.

Credit card companies are being taken to court, in hopes of dissuading them from processing payments from offshore gambling sites .

In Pennsylvania, where internet service providers (ISPs) are banned from hosting child-porn web sites, the state has sued WorldCom, which subleases bandwidth to hundreds of ISPs, as a way to multiply the scope of its attack.

The proliferation of lawsuits threatens to chill the development of the Internet and

e-commerce, said Marcus Bornfreund, head of the University of Ottawa's Law and Technology program.

"It introduces legal uncertainty into the transactions. People may be less willing to do business with some of these Internet retailers or service providers, it puts people off," Mr. Bornfreund said.

The U.S. recording industry has filed suit against numerous intermediaries since it took down Napster -- players whose connection to the Internet is tenuous at best.

One ongoing court case involves the venture capitalists who provided startup funding for Napster. Another, settled out of court, was filed against the lawyers for a former subsidiary, MP3.com.

It's an example of how Internet disputes have the potential to set legal precedents that will be felt far beyond the online realm.

"This really represents a sea change," said Mr. Geist, who holds the Canada Research Chair in Internet and E-Commerce Law.

"It sends a very clear warning signal that if you're considering investing in a service that pushes the envelope a little, you, too, may face liability."

Meanwhile, governments and companies are going to court to try to stamp out the distribution of hate literature over the Internet or stop illegal use of copyrighted digital material, but the effect may be to limit free speech, critics warn.

In the U.S., companies are allowed to blanket ISPs and search engines with computer-generated written warnings of lawsuits, unless offending materials are taken offline.