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Legal
Issues for dot.com companies
Scott Singer, Head
of IT Law, Sinclair Roche & Temperley
www.srtlaw.com
Royex House, Aldermanbury
Square, London EC2V 7LE
(t) +44 (0)20 7452
4000
(f) +44 (0)20 7452
4001
Marcus Iles, e-commerce
project team, ITIC
www.itic-insure.com
International House,
Creechurch Lane, London EC3A 5BA
(t) +44 (0)20 7204
2347
(f) +44 (0)20 7338
0151
- Introduction
- liability for
emails
- liability for
statements/content in cyberspace
- e-ideas and
intellectual property rights
- agreements in
cyberspace
- ramifications
of the global nature of the internet
- data protection
- conclusion
Legal disclaimer
notice
This paper, as delivered
during the presentation and as set out in this outline, is intended as
a general introduction to the issues covered only and should NOT be relied
upon without FIRST seeking specific specialist advice for the situation
in question. SRT IT Law Unit may be contacted on +44 (0)20 7452 4000 (tel)
and +44 (0)20 7452 4001 (fax).
ALWAYS seek specific
advice.
Introduction
- The dotcom age
- the provision of information, electronically.
Liability for emails
- Use common sense
- Take care when
using mailing lists
- Do not make, or
pass on offensive or slanderous remarks
- If necessary, check
your systems are compatible with those of your customers and service
providers
E-commerce and
information
- Information is
central to e-commerce
- e-commerce centres
around the use of information technology to send, receive and process
information - to make money
- Legal ramifications:
- a dot.com’s
information (eg content; know-how) is one of its most valuable assets
- Information as
property is a very difficult area in law
- not all information
can be easily protected:
- ideas which are
not original
- information which
is already in the public domain
- The protection
of information is of critical importance for dot.com companies
E-commerce and
ideas
- Far more scope
on the electronic frontier for a new idea than in the terrestrial world
- 1991: NSF relaxes
ban on commercial applications
- 10 years of history
vs 10,000
- The money in e-commerce
at present is in putting new ideas into effect rather than using them
to make money per se
- Protection of ideas
is critical
Protecting information
and ideas
- Registrations to
protect brands
- in all relevant
jurisdictions
- trademarks: eg
egg; smile
- domain names: protective
registrations to prevent cybersquatters
- company names
- Patents: software;
methods of doing business
- Confidentiality:
for know-how and commercial information
- Use NDAs
- Relevant provision
in contracts with 3rd parties and employees
- Copyright: original
ideas expressed in permanent form
- Develop goodwill
- Advertising: often
conventional first, then electronic
- IPRs are strengthened
through use and active protection
Electronic contracts
- Generally, for
a contract to be legally binding under English law there must be:
- observance of any
requisite formalities
- agreement as to
the terms of the contract
- consideration
- intention to enter
into a legally binding contract
- In cyberspace there
can be particular problems with all of these - perhaps with the exception
of "consideration"
- dot.com ventures
which do not pay specific attention to these issues may run into problems
with the enforceability or questions over the true terms of their contracts
E-contracts: formalities
- General rule under
English law
- no specific form
is required in simple contract
- contracts can be
oral, in writing or inferred by conduct and do not require signature
- However specific
formalities are required for some contracts
- Guarantees: s.4
Statute of Frauds
- Bills of lading
- Contracts for the
sale of land
- Speciality contracts
- contracts by deed
- These must be "in
writing" and "signed"
- Are electronic
documents "In writing"?
- no law on point,
however many believe "yes"
- Is an electronic
signature valid
- no law on point,
however many believe "no"
E-contracts: formalities
- Formalities: solution
- provide for these
formalities by prior agreement
- all electronic
communications and signatures to be deemed valid and binding
- Bolero: rule book
- UK Electronic Communications
Act 2000
- deals with these
issues
- electronic signatures
- authentication
services
E-contracts:
Agreement and Incorporation
- The essence of
contract from a legal perspective is agreement
- Certainty of what
has been agreed is essential
- suppliers of e-services
will wish to ensure that they are provided on their standard terms and
conditions
- Problems can arise
when agreeing electronically if care is not taken:
- web pages are invitations
to treat
- a page which appears
to be an offer to sell may me a mere supply of information
- all the subsequent
exchanges will be out by one step
- terms may be deemed
not incorporated if insufficient notice is drawn to them
- click-wrap licences
may be ineffective
- shrink-wrap licences
for packaged software may be ineffective
E-contracts:
Agreement and Incorporation
- Solution
- structure your
agreements to take account of the displaced step
- include express
terms in your terms and conditions
- "By clicking
on the Proceed Button you will be deemed to be offering to enter into
an agreement with us on the terms and conditions set out below"
- ensure that click
wrap licences are incorporated into websites properly
- buttons to be greyed
out until a text window has been scrolled through to the end
- do not use a text
window - put buttons at the end of the text of the agreement
- use notices of
terms and conditions through out the site
- hyperlinks to terms
and conditions
Ramifications of
the global nature of the Internet
- A web page:
- can, in principle,
be viewed by anyone, anywhere in the world
- can be viewed by
many people at once
- What are the ramifications
of this?
- e-commerce sites
can do business with users in every jurisdiction in the world
- What is the proper
law and jurisdiction of the contract?
- A problem of the
conflict of laws
- Contracts with
consumers
- EU distance selling
directive
- Draft amendments
to the Brussels convention
- content can theoretically
fall foul of the law in every jurisdiction in the world
- infringement of
IPRs: patents, trademarks and copyright
- other laws: obscenity;
freedom of expression
Personal information
- data protection
- Trans-border data
flows are prohibited outside the EU unless the recipient country respects
data protection principles
- The EU Data Protection
Directive (94/46/EC):
- "Personal
data shall not be transferred to a country or territory outside the
European Economic Area unless that country or territory ensures an adequate
level of protection for the rights and freedoms of data subjects in
relation to the processing of personal data" (The Eight Principle)
- Therefore countries
outside the EEA must have data protection laws at least as good as those
within the EEA
- Nearly all dot.com
companies in the maritime and transport sector will be involved in trans-border
data flows
- In practice the
processing of personal data is subject to legal control
- "data which
relate to a living individual who can be identified
- from those data;
or
- from those data
and other information which is in the possession of, or is likely to
come into the possession of, the data controller" s 1(1) Data Protection
Act 1998 / EU Data Protection Directive (95/46/EC)
- What constitutes
personal data?
- Likely to be data
concerning individual consumers
- could be information
concerning contacts in companies if there is sufficient detail in the
data to make it more than just a bare list of commercial contacts
- What are the controls?
- Data must be processed
in accordance with the data protection principles
- Appropriate technical
and organisational measures shall be taken against unlawful processing
of personal data and against accidental loss or destruction of, or damage
to, personal data
Conclusion
- Use common sense;
take care to confirm you have used the correct content and recipient;
do not pass on slanderous remarks, even if they are funny; regularly
check your systems for compatibility.
- The concept of
information as property is central to E-commerce; intellectual property
rights are therefore critical
- Various legal issues
must be addressed at an early stage in the project to avoid unnecessary
and possibly fatal consequences once trading has begun
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