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United Kingdom

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									                            NATIONAL REPORT FOR

                    THE INTERNATIONAL LEAGUE FOR

                               COMPETITION LAW




                      QUESTION 3 - HOW CAN ONE ENSURE
                    THE EFFECTIVE RESPECT OF THE RULES
                     OF FAIR COMPETITION IN RESPECT OF
                           ELECTRONIC COMMERCE




ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC
                                                   TABLE OF CONTENTS

Question 1. The use of e-mail for advertising ........................................................................ 1
Spamming................................................................................................................................... 1
The Data Protection Directive .................................................................................................... 2
  Definitions ............................................................................................................................. 2
  The Data Protection Principles ........................................................................................... 4
The Telecommunications Data Protection Directive ................................................................. 5
  What do the Regulations cover? ......................................................................................... 6
  Key Terms ............................................................................................................................. 6
  Traffic and Billing Data ....................................................................................................... 7
  Caller Identification ............................................................................................................. 8
  Directories of Subscribers.................................................................................................... 9
  Unsolicited Calls and Faxes ............................................................................................... 10
  Security Issues .................................................................................................................... 11
  Non-Itemised Billing .......................................................................................................... 11
  Automatic Call Forwarding .............................................................................................. 11
  Compensation ..................................................................................................................... 11
Outstanding Provisions .......................................................................................................... 11
Advertising Standards .............................................................................................................. 12
     The British Code of Sales Promotions (6th Edition, February 1995) ( ..................... 14
     Enforcement .................................................................................................................... 15
  Misrepresentation ............................................................................................................... 15
  Statutory Regulations ........................................................................................................ 16
Summary .................................................................................................................................. 17
Question 2. The Use of Hyperlinks........................................................................................ 17
Hyperlinks ................................................................................................................................ 17
Metadata ................................................................................................................................... 21
Databases .................................................................................................................................. 22
Domain names .......................................................................................................................... 22
The Copyright Directive ........................................................................................................... 24
Reproduction Rights ................................................................................................................. 24
Question 3. Limitations for online marketing of specific products .................................... 25
General Overview..................................................................................................................... 25
Tobacco Products ..................................................................................................................... 25
Alcohol ..................................................................................................................................... 26
Medical Products ...................................................................................................................... 26
Financial Services..................................................................................................................... 27
Question 4. Limitations for on-line marketing for specific persons................................... 28
Minors ...................................................................................................................................... 28
Lawyers, doctors and dentists advertising their services on the Internet.................................. 28
     Lawyers - Solicitors ........................................................................................................ 29
     Doctors ............................................................................................................................. 29
     Others .............................................................................................................................. 30
Question 5. To what extent are there any information duties with regard to commercial
websites? 30
Misrepresentation ..................................................................................................................... 30
Distance Selling Directive ........................................................................................................ 30
Question 6. Netiquette and self-regulation ........................................................................... 32
PROCEDURAL RULES ....................................................................................................... 32

ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC
Question 1. Which principles are applied to solve the problems of private international
law?          32
General Overview..................................................................................................................... 32
Applicable Law ........................................................................................................................ 33
Question 2 How can national regulations be enforced in other states? ............................ 34
Jurisdiction ............................................................................................................................... 34
Jurisdiction and the Internet ..................................................................................................... 35
Interim or injunctive proceedings ............................................................................................. 36
Global Injunctions .................................................................................................................... 36




ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC
ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC
NATIONAL REPORT FOR THE INTERNATIONAL LEAGUE FOR
COMPETITION LAW


QUESTION 3 - HOW CAN ONE ENSURE THE EFFECTIVE RESPECT OF THE
RULES OF FAIR COMPETITION IN RESPECT OF ELECTRONIC COMMERCE


Question 1.     The use of e-mail for advertising

     Spamming

.1     "Spamming" is the posting of unsolicited commercial e:mail (UCE) advertisements to an
       e-mail address or newsgroup. "Flame mails" are aggressive or "flaming" messages which
       are often sent by the recipients of unsolicited e:mails to those posting the 'junk mail'.

.2     Spamming and flame mails are not subject to specific legislation in the UK. However, the
       Code of Practice adopted by the UK Internet Service Provider's Association (ISPA) on 25
       January 1999, provides some protection to internet uses. The Code requires members to
       follow the best industry practice in using Spamming Software (software which is used for
       filtering out Spam prior to it reaching e-mail addresses or newsgroups) so that customers
       can elect to minimise the amount of Spam sent to their e-mail account. A breach of this
       Code means that the Association can require the member to remedy the breach and to
       reimburse the customer any service charges paid or suspend the member and publicise
       that fact.

.3     At the time of writing, the first case in the UK involving legal action relating to the
       sending of unsolicited e-mails is due to come before the courts. An e-mail service
       provider is claiming damages from a customer who allegedly used the network to send
       junk mail to thousands of users, many of whom complained to the service provider. If
       successful, this case could open the floodgates for many other similar claims. In addition,
       the following aspects of UK and EU legislation and regulation relating to advertising
       which would also cover advertising by e-mail will apply.

.4     The regulation of e-mail advertising in the UK is principally covered by the following
       areas:-

       -        data protection;
       -        direct marketing;
       -        advertising standards;
       -        misrepresentation.

.5     Regulations relating to distance selling are also relevant and are discussed under
       question 5.

.6     Data protection and direct marketing are covered by national measures implementing the
       following EC Directives:-

       -        The Data Protection Directive (95/46/EC)
       -        The Telecommunications Data Protection Directive (97/66/EC);

ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC1
.7      Advertising standards are generally covered by codes of practice rather than regulation.
        There are a number of self-regulating bodies which issue codes of conduct for advertising
        standards, the most important of which is the Advertising Standards Authority (ASA)
        which has issued the British Codes of Advertising and Sales Promotion.

     The Data Protection Directive

.1      Directive 95/46/EC has been implemented into UK national legislation by the Data
        Protection Act 1998 (the "DPA 98") which received Royal Assent on 18 July 1998. The
        provisions apply to any new processing of personal data from 24 October 1998 although
        the Act is not likely to come into force before the end of June 1999.

.2      Section 11 of the Data Protection Act entitles the data subject to serve a notice on data
        controllers requiring them within a reasonable time to cease, or not to begin processing
        personal data about them for the purpose of direct marketing. Direct marketing is defined
        as the communication, by whatever means, of any advertising or marketing material
        which is directed to particular individuals. This definition is sufficiently wide to cover
        advertising by e-mail.

.3      Definitions

.3.1    Personal Data

        (a)    The Directive adopts a broad definition of the term "Personal Data" and includes
               any expression of opinion about the individual and any indication of the intentions
               of the Data Controller (see further below) or any other person in respect of that
               individual. The Personal Data may relate to an identified or identifiable person
               ("Data Subject"), that is, the person may be directly identified by reference to his
               name for example, or indirectly identified by reference to some other feature of
               that person such as an identification number. With regard to the Internet, Articles
               14 and 15 of the Data Protection Directive include forms of sound or images in
               the definition of Personal Data.

        (b)    There may be two forms of Personal Data on the Internet:

               (i)      Personal Data contained in the actual content of a message which the Data
                        Subject sends over the Internet. Usually this information has been
                        requested and the Data Subject volunteers the response. Consider the
                        scope for such a disclosure, it would usually go beyond a Data Subject's
                        name and address to include personal details as to preferences (food,
                        drinks, holiday resorts, pizza toppings etc) or even sensitive data relating
                        to religion or disabilities.

               (ii)     While on-line, the Data Subject will leave an electronic trace which takes
                        the form of a series of numbers, ie an IT address. A third party can use
                        this trace to put a name to a particular user by accessing his e-mail address
                        or discovering his name.




ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC2
.3.2   Processing

       (a)    In relation to information or data, processing means obtaining, recording or
              holding the information or data which includes, in relation to Personal Data,
              obtaining or recording the information to be contained in the data, or carrying out
              any operation on the information or data including:

              (i)     organisation, adaptation, alteration;

              (ii)    retrieval, consultation or use;

              (iii)   disclosure of the information or data by transmission, dissemination or
                      otherwise making it available;

              (iv)    alignment, blocking, erasure or destruction of the information or data.

       (b)    The Internet acts as a database in the sense that it is used to transmit, receive and
              store messages or sets of structured information. Processing the Personal Data in
              this way will grant the Data Subject a number of rights under the DPA 98 and
              impose a number of obligations on the Data Controller.

.3.3   Data Controller

       (a)    This is a person who determines the purposes for which and manner in which any
              Personal Data is processed. (Formerly known as the Data User under the Data
              Protection Act 1984).

       (b)    Identification of a Data Controller is one fundamental problem associated with the
              Internet since there are numerous parties involved in the provision of on-line
              services and the transmission of messages:

              (i)     the telecommunications organisation which provides a basic network for
                      data transfer;

              (ii)    access provider which supply services for storage, transmission and
                      presentation, routing messages over the Net;

              (iii)   information providers which supply the information which is stored and
                      filed on databases;

              (iv)    service providers which offer their services to the users via the Net;

              (v)     the user (Data Subject) himself.

       (c)    Similarly, a "Data Processor" is any person who processes the data on behalf of
              the Data Controller.

.3.4   National Law Applicable




ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC3
       (a)    One fundamental issue which was addressed in the DPA 98 was the scope of the
              Data Protection Directive and the DPA 98 in the context of a global computer
              network such as the Internet. This issue is addressed in section 5 of the DPA 98
              which states:

              "... This Act [DPA 98] applies to a Data Controller in respect of any data
              only if:

              (i)     the Data Controller is established in the United Kingdom and the data is
                      processed in the context of that establishment, or

              (ii)    the Data Controller is established neither in the United Kingdom nor in
                      any other EEA state but uses equipment in the United Kingdom for
                      processing the data otherwise than for the purpose of transit through the
                      United Kingdom."

       (b)    Sub-section 3 states that a person is treated as established in the United Kingdom
              for the purposes of section 5 in the following circumstances:

              (i)     an individual who is ordinarily resident in the UK;

              (ii)    a body incorporated under UK law;

              (iii)   a partnership or other unincorporated association formed under UK law;

              (iv)    any person not falling within the former three sections but maintaining an
                      office, branch or agency to which he carries on any activity or a regular
                      practice in the UK.

       (c)    Accordingly, Data Controllers established outside the EEA which do not maintain
              any presence (ie office with processing equipment) within the UK, fall outside of
              the ambit of the DPA 98.

.4     The Data Protection Principles

       (a)    The DPA 98 sets out eight principles, essentially but not exactly the same as those
              under the 1984 Data Protection Act.

              (i)     Personal Data shall be processed fairly and lawfully and in particular, shall
                      not be processed unless at least one of the conditions in Schedule 2 is met
                      and in the case of sensitive Personal Data, at least one of the conditions in
                      Schedule 3 is also met;

              (ii)    Personal data shall be obtained only for the one or more specified and
                      lawful purposes, and shall not be further processed in any manner
                      incompatible with that purpose or those purposes;

              (iii)   Personal data shall be adequate, relevant and not excessive in relation to
                      the purpose or purposes for which they are processed;



ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC4
               (iv)    Personal data shall be accurate and, where necessary, kept up to date;

               (v)     Personal data processed for any purpose or purposes shall not be kept for
                       longer than is necessary for that purpose or purposes;

               (vi)    Personal data shall be processed in accordance with the rights of the Data
                       Subjects under this Act;

               (vii)   Appropriate technical and organisational measures shall be taken against
                       unauthorised or unlawful processing of Personal Data and against
                       accidental loss or destruction of, or damage to, Personal Data;

               (viii) 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 Telecommunications Data Protection Directive

.1      Directive 97/66/EC concerning the processing of personal data and the protection of
        privacy in the telecommunications sector, is directed more specifically to the particular
        policy issues which arise in the context of telecoms services which for the main part
        includes e-mail. It extends the scope of the existing Data Protection Directive and was
        introduced to ensure that the increasing use of digital technology was not restricted due to
        subscribers concerns about privacy.

.2      Article 1 of the Directive states that its object and scope is to:

               "ensure an equivalent level of protection of fundamental rights and freedoms, in
               particular the right to privacy, with respect to the processing of personal data in
               the telecommunications sector and to ensure the free movement of such data and
               of telecommunications equipment and services in the community."

.3      The Telecoms Data Protection Directive is being implemented in the UK in three stages.

.4      As a first step, the Telecommunications (Data Protection and Privacy) (Direct Marketing)
        Regulations 1998 (the "Direct Marketing Regulations") were laid before Parliament on
        17 December 1998 and come into force on 1 May 1999.

.5      Secondly, these Regulations will be replaced and incorporated with the remaining
        provisions of the Directive in the Telecommunications (Data Protection and Privacy)
        Regulations 1999 (the "Regulations"). These have yet to be published in their final form
        but are expected to come into force at the same time as the Data Protection Act, not before
        the end of June 1999.

.6      The government has completed a period of consultation and already published two drafts
        of the proposed Regulations.

.7      The direct marketing portion of the Telecoms Data Protection Directive was introduced
        earlier because of public pressure and other lobbying for swift implementation of the

ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC5
       consumer protection it provided and in order to give OFTEL (the Office of
       telecommunications, which regulates this sector) and industry time to consult on how
       these regulations should be implemented.

.8     Thirdly, the portion of the Directive which deals with confidentiality of communications
       is being considered as part of a wider review of the Interception of Communications Act
       1985 and is not expected to be enacted for some time.

.9     What do the Regulations cover?

       (a)    The first set of draft guidelines prompted the question - which parts of the
              Regulations cover electronic mail? The DTI now states that some provisions do
              apply to e-mail as it is a "publicly available telecoms service", in particular the
              requirements regarding security and directories (as discussed below).

.10    Key Terms

       (a)    The Regulations will confer substantial rights on telephone users. In order to
              discuss the Regulations the key definitions must be understood.

              (i)     "subscriber" is a person who is a party to a contract with a
                      telecommunications service provider for the supply of publicly available
                      telecommunication services;

              (ii)    "individual" is a living person, a sole trader or an English partnership;

              (iii)   "corporate subscriber" means a subscriber who is not an individual,
                      ie a body which is a legal person distinct from the persons of which it is
                      composed and would include a Companies Act company, a Scottish
                      Partnership or other corporate body;

              (iv)    "public telecommunications networks" are transmission systems and
                      other switching or associated equipment which permits the conveyance of
                      signals between different termination points by wire or other
                      electro-magnetic means and which are used, in all or in part, for the
                      provision of publicly available telecommunications services;

              (v)     "telecommunications services" mean a service consisting wholly or
                      partly of the transmission and routing of signals on telecommunications
                      networks, with the exception of radio and television broadcasting. (A
                      wide range of publicly available telecommunications services, including
                      publicly available voice, data and fax fall within the provisions of these
                      Regulations but broadcasting and radio services do not.)

       (b)    It should be noted that any contractual term between a subscriber and a provider of
              telecoms services which are inconsistent with these Regulations will be void
              (Regulation 3(2)).




ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC6
.11    Traffic and Billing Data

       (a)    The Regulations establish the important principle that once traffic data is
              processed to secure the connection of a call it must be deleted or depersonalised
              upon the termination of the call (Regulation 5).

       (b)    The Regulations do recognise that some information will need to be retained as
              billing data. Schedule 1 defines exactly what data may be retained for the
              purposes of subscriber billing and interconnection payment, namely a subscriber's
              address and the type, date, starting time and duration of calls and any payment
              details. Regulation 6 states that even information which has been legitimately
              retained may be kept only until the expiry of the period during which legal
              proceedings may be brought (generally 6 years). If proceedings are brought, data
              may be retained until they are finally determined.

       (c)    Regulation 7 states that data of the sort set out in Schedule 1 may be processed for
              marketing reasons if the subscriber has given his consent.

       (d)    What is key, therefore, is exactly what constitutes "consent". The Directive does
              not define consent, but the Data Protection Commissioner who is responsible for
              enforcing these Regulations has offered some guidance on the point.

       (e)    The Commissioner has relied on the definition given in the Framework Directive.
               There consent is deemed to mean a "freely given specific and informed
              indication". Thus, it will not be sufficient to obtain an uniformed general consent
              from a subscriber, rather consent must occur so that the individual concerned is
              clearly aware of the way in which the data may be used. Therefore, further
              consent will be needed if the data to which the subject has given his consent is
              used for a purpose different from that for which the original consent was given.

       (f)    The question has been raised as to whether consent can be inferred by a
              subscriber's decision to enter into a contractual agreement with a particular
              provider. Providers will need to ensure the subscriber or data subject can
              legitimately be considered to have given a specific indication of his wishes. The
              guidelines state that this should not be too difficult where a subscriber signs a
              formal agreement. They also state that valid consent can be given orally, but
              presumably the onus will be on the data user to ensure the data subject is aware of
              the planned uses of the data.

       (g)    Regulation 8 also recognises the processing of such data may be undertaken for
              reasons other than direct marketing such as customer enquiries and the detection
              of fraud. However such processing should be strictly limited to the extent
              necessary to achieve these purposes and will require the authority of the provider
              concerned.

       (h)    In addition it is stated that nothing in this Regulation shall prevent the furnishing
              of billing data to a person who is a competent authority for settling billing disputes
              (Regulation 9).




ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC7
       (i)    There is likely to be an exemption granted in respect of data which is or has
              already been processed on the date which the regulations enter into force.
              However, it is not clear at present exactly how this exemption will operate. DTI
              guidelines suggest the Commissioner will state that new data received after the
              Regulations come into effect, which is processed in the same manner as before,
              will be allowed to continue as long as individual subscribers have been informed
              and given their consent. Thus, any new way of processing existing data is likely
              to be caught by requirements of these Regulations.

.12    Caller Identification

       (a)    The Regulations cover the presentation and restriction of calling and
              connection line identification (CLI). In practise this means the service whereby
              a customer can use equipment capable of displaying the calling number on a
              screen or by a Call Return service (1471 in the UK) to receive a network
              announcement stating the identification of the last call received.

       (b)    In brief, the key provisions are:

              (i)     Where presentation of CLI is offered, callers must have the option to
                      prevent without charge the presentation of their identification on a per call
                      basis (Regulation 10). This is known as call blocking. Also the calling
                      subscriber must have this option on all calls made on his line if he so
                      chooses. This is known as line blocking. Both these services should be
                      provided in a simple manner and free of charge. Although they are
                      currently offered in the UK, it will become a legal requirement to offer
                      such services. It should be noted that these obligations extend to any
                      network over which the call travels (Regulation 15);

              (ii)    The term "user" is defined very widely, to mean an individual using any
                      publicly available telecommunications service, whether or not he has
                      subscribed to that service. The right to call blocking will thus apply to
                      calls from pay phones and other telephones which are publicly accessible;

              (iii)   Where a presentation of a CLI for an incoming call is offered the called
                      subscriber must have the possibility to prevent the presentation of the CLI
                      of incoming calls, without charge for reasonable use. This provision is
                      designed to help confidential help lines who need to guarantee complete
                      anonymity to callers (Regulation 11(2);

              (iv)    Where a presentation of a CLI is offered and where the CLI is presented
                      prior to the call being established, the called subscriber must have the
                      possibility to reject incoming calls where the presentation of the CLI has
                      been eliminated by the calling user. It should be noted that this service
                      need not be free and only applies where identification has been
                      deliberately withheld rather than the case where identification is
                      undeliverable. It is proposed that this measure be implemented in the UK
                      by means of Anonymous Call Rejection as a network service which means
                      that withheld calls cannot connect to the subscriber. A caller would have
                      to ring back and identify himself before the call could proceed;

ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC8
              (v)     Where the presentation of CLI is offered, the called subscriber must have
                      the possibility, by simple means and free of charge, to eliminate the
                      presentation of the connected line identification to the calling user
                      (regulation 11(3)).

       (c)    The CLI options are already covered in the UK by the OFTEL Code of Practice
              published in December 1996. The DTI guidelines recognise that the current
              awareness of the 1471 service means that subscribers and users will already be
              familiar with their new rights.

       (d)    A telecommunications service provider must ensure it possesses the ability to
              override the elimination of the presentation of CLI if a subscriber requests the
              tracing of malicious or nuisance calls. This capability must also be retained for the
              emergency services to trace calls made to them (Regulations 12 and 13).

.13    Directories of Subscribers

       (a)    Requirements for directories of subscribers which are available to the public or
                                                                          are     used      by
                                                                          directory enquiry
                                                                          services are covered
                                                                          by Regulations 16
                                                                          to     19.     Such
                                                                          directories may be
                                                                          collated       from
                                                                          information given
                                                                          by providers of
                                                                          publicly available
                                                                          telecommunications
                                                                          service or from
                                                                          other sources.

       (b)    The personal data contained in printed or electronic directories of subscribers
              available to the public must be limited to what is necessary to identify a particular
              subscriber and the number allocated to him. This is unless the subscriber has
              given unambiguous consent to additional material being included in a directory.

       (c)    Individuals also have the right to be omitted from such a directory on request, the
              right to omit a section of their address, remove any reference to his/her sex, or
              choose to take out the entry altogether. Where a corporate subscriber has
              requested that a particular number be excluded from a directory, this must also be
              complied with. Exercise of these rights must be free of charge.

       (d)    These obligations are imposed on all organisations involved in the production of
              directories whether or not they received a request from a subscriber direct.

       (e)    A subscriber also has the right to go ex-directory free of charge. BT currently does
              not make any charge for this service. There is a similar right for corporate
              subscribers who may not wish certain numbers to be publicly available.

ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC9
.14    Unsolicited Calls and Faxes

       (a)    These provisions are dealt with in the Direct Marketing Regulations. They are
              particularly aimed at stopping "junk" communications by fax and random calling
              by automated calling systems. The provisions also cover any unsolicited calls
              made for direct marketing purposes.

       (b)    These measures do not currently cover e-mail. However there is the possibility
              that an increase of "junk e-mail" may give rise to future amendments to the
              Regulation in this regard.

       (c)    The use of "automated calling systems without human intervention" (ie automatic
              calling machines), for the purpose of direct marketing, will be allowed only where
              subscribers have given their prior consent.

       (d)    The registration of the objections to receiving direct calls can be implemented by
              means of either an "opt out" or an "opt-in" system. An "opt-out" system is where
              the consumer would have to register their objection in order to avoid receiving
              such direct calls. An "opt-in" system is where direct marketing techniques could
              only be used in respect of consumers who have registered their consent to receive
              such calls. The UK government at present has decided to implement the Directive
              by means of an "opt-out".

       (e)    Therefore, no unsolicited direct marketing calls shall be made to a subscriber
              where that subscriber has indicated that he does not wish to receive them. A
              subscriber may only be faxed for marketing purposes so long as they have not
              informed a central register that they do not wish to receive such calls. The
              government has emphasised that should this procedure not prove effective, it will
              consider adopting a system where individual subscribers would have to give prior
              consent before receiving direct marketing calls.

       (f)    OFTEL has just finalised the agreement to contract out the operations and
              maintenance of the register of subscribers who do not wish to be contacted by
              those involved in direct marketing. The register will be self-financing; therefore
              those engaged in direct marketing will have to pay to check that it is appropriate to
              contact those numbers they plan to call.

       (g)    It will also be a requirement that all persons making direct marketing faxes or
              calls shall include on the fax or give during the call their name and address or a
              free phone number as a means of contact.

       (h)    The conduct of direct marketing is likely to change radically. Existing schemes to
              inform direct marketing organisations that a subscriber does not wish to be
              contacted are haphazard and self-regulating. By contrast compliance will now be
              crucial given both the formidable enforcement powers contained in these
              Regulations and the possibility that a person who suffers damage from breach of
              these regulations will seek redress in the courts.




ALD5/4ACDDC71-0FD8-4555-8ACE-A252A5423CD4.DOC
                                            10
       As mentioned previously, these regulations do not presently cover e-mail. However there
       is an obvious parallel between the protection of consumers from such direct marketing
       calls and faxes and their protection from spamming. It is likely that the success of the
       ISP's voluntary code, will be taken into consideration in any future question as to whether
       and if so how, such protection should and/or could be extended to advertising or
       marketing via e-mail.

.15    Security Issues

       (a)    Regulation 25 imposes an obligation on the providers of publicly available
              telecommunications services to take appropriate technical and organisational
              measures to ensure the security of the service they provide, if necessary in
              conjunction with network providers. This Regulation further states that the
              provider of the network services must comply with any reasonable request made
              in this regard.

.16    Non-Itemised Billing

       (a)    The right is confirmed for subscribers to receive non-itemised bills if they so
              request, under Regulation 26 at no charge.

.17    Automatic Call Forwarding

       (a)    The relevant telecommunications service provider must ensure that the subscriber
              is provided, free of charge and via simple means, with the possibility to stop a
              third party's calls to the subscriber's terminal. Regulation 28 also states that it is up
              to the operator concerned to decide whether to implement this requirement by
              means of a network solution or via operator services.

.18    Compensation

       (a)    A person who suffers damage by reason of any contravention of any requirements
              of these Regulations shall be entitled to compensation. In addition these
              Regulations shall be enforced by the Data Protection Commissioner. It should be
              noted that any contractual term between a subscriber and a provider of telecoms
              services which is inconsistent with these Regulations will be void
              (Regulation 3(2)).

.19    Outstanding Provisions

       (a)    Article 5 of the Directive relating to confidentiality of communications does not
              require implementation until October 2000. It may cause great upheaval as it
              prohibits "listening, tapping, storage or other kinds of interception or surveillance
              of communications by others than users without the consent of users concerned,
              except where legally authorised."

       (b)    Current English law requires that parties to the call are aware that the recording is
              taking place and the purpose of the recording. This can be achieved by small print
              in an advertisement explaining that calls may be recorded and why. The Directive
              will require that specific consent is given if the call is to be recorded. This could

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               be very impractical, particularly in the area of financial services when telephone
               calls are regularly monitored.

        (c)    Consent is required from both sides. This may end the practise of companies
               monitoring staff calls and may even prevent companies monitoring staff e-mails.
               There will be more detail forthcoming on these points when the DTI publish their
               draft regulations on this point, expected in the summer of 1999.

     Advertising Standards

.1      Advertising in the UK is regulated by a mesh of legislation, voluntary codes and guidance
        rules. There are both general rules and specific rules concerning certain products and
        services, such as tobacco products, medicines, gaming and betting and alcohol. These
        rules sit uncomfortably with the Internet which ignores national boundaries and
        transcends local and jurisdiction.

.2      As businesses continue to exploit the Internet as a means of advertising and for use in
        commerce, regulatory authorities are having to address the legal implications and
        governance of Internet practices to a greater degree, whether by self or legal regulation.
        The momentum behind the efforts to regulate web advertising and commerce has been
        driven to a greater extent by Brussels than by UK Government. Two such EU proposals
        are the Commission green paper on commercial communications and the EU Directive on
        legal aspects of electronic commerce.

.3      In the UK the current approach is based on self-regulation within the advertising industry.
         The British Codes of Advertising Practice and Sales Promotion, written and enforced by
        the UK advertising industry, govern what can and what cannot be advertised and the form
        such advertisements can take. The Codes were updated in 1995 to include non-broadcast
        electronic media.

.3.1    The British Code of Advertising Practice (9th Edition, February 1995) ("BCAP")

        (a)    This Code was laid down by the Committee of Advertising Practice ("CAP") and
               compliance with it is supervised by the Advertising Standards Authority ("ASA").
                BCAP applies to advertising by means of newspapers, magazines, cinema and
               video commercials, mailing lists, sales promotions and advertising promotions.

        (b)    Although BCAP does not specifically address advertising on the Internet, ASA
               has taken a view that it could nonetheless apply to advertising in this form, as
               though the advert was being published in one of the mediums mentioned above.
               Accordingly, the ASA does not propose to amend BCAP.

        (c)    BCAP establishes a number of basic principles which apply to all advertisements.
               They must be:

               (i)     legal, decent, honest and truthful;

               (ii)    prepared with a sense of responsibility to consumers and to society; and




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              (iii)   respectful of the principles of fair competition generally accepted in
                      business.

       (d)    Furthermore, all claims made by an advertiser must be capable of substantiation
              and supported by relevant documentary evidence1.




       1
              Clauses 3 and 4 BCAP

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       (e)    Advertisers are also obliged not to mislead consumers with inaccuracy and
              ambiguity, exaggeration, omission or otherwise.2

       (f)    It contains provisions which address violence and anti-social behaviour, politics
              and fear/distress in adverts, as well as various sections on comparative
              advertising. For example, clause 19.1 permits direct and indirect comparisons in
              the interests of competition and public information. Comparisons should be clear
              and fair, and the elements of any comparison should not be selected in a way that
              gives the advertiser an artificial advantage.

.3.2   The British Code of Sales Promotions (6th Edition, February 1995) ("BCSP")

       (a)    Although this Code contains similar provisions to those identified above relating
              to BCAP, the BCSP also addresses the issue of distance selling. Many of these
              provisions reiterate, and have been superseded by, the EU Distance Selling
              Directive which is discussed further under question 5. The following principles
              apply:

              (i)     the promotion should state the full name and address of the advertiser and
                      the main characteristics of the service being offered. Any additional costs,
                      such as VAT or transport and delivery charges, should also be stated.

              (ii)    any peculiar or other conditions which effect the availability of the goods
                      should also be explained: any time or availability limitations on the offer,
                      conditions which affect the validity of the offer, the estimated time for
                      delivery, etc.

              (iii)   any order received from a consumer should be fulfilled within 30 days
                      (except in exceptional circumstances);

              (iv)    the customer should be provided with written information on payment
                      arrangements, credit, instalments, the right to withdraw, cancellation and
                      the most appropriate address for contact; and

              (v)     money should be refunded promptly when the consumers have not
                      received their goods or services, or where goods returned because they are
                      damaged. Unwanted goods may be returned undamaged within seven
                      working days or when an unconditional money back guarantee is given
                      and the goods are returned within a reasonable time period.

       (b)    There are also provisions dealing with data protection issues - personal
              information should be held securely and safeguarded against unauthorised use,
              remove individuals from mailing lists if so requested, etc. The penalties for
              breach of this code mirror those discussed above.

.3.3   There are additional requirements relating to the advertisement of specific products such
       as the Cigarette Code. These are is discussed under Question 3 on page 24.


       2
              Clause 7 of the BCAP

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.3.4   Enforcement

       (a)    Although compliance with the Codes is voluntary, CAP or the ASA may require
              an advertiser to withdraw or amend an advertisement in breach of them. This is
              not obligatory but CAP and ASA can persuade the respective media organisations
              not to publish an offending advert. Failure to comply can result in adverse rulings
              and a description of the breach is published in the ASA's monthly publication.
              The adverse publicity that may result from this will in many cases be the most
              effective sanction.

       (b)    Alternatively the advertisement may be referred to the Director General of the
              Office of Fair Trading under the terms of the control of Misleading
              Advertisements Regulations 1988, which empower the Director General to obtain
              an injunction to prevent publication of the offending advertisement.

       (c)    However, ASA is not a law enforcement body. Any matter that principally
              concerns a legal dispute will be resolved through the courts.

.4     Misrepresentation

       (a)    The law of misrepresentation is also relevant to contracts made as a result of
              Internet advertising.

       (b)    When one person (the "representor") makes a false representation (a
              "misrepresentation") in an advertisement to another (the "representee") which has
              the result of inducing the representee to enter into a contract with him, the
              representee may generally elect to treat the contract as rescinded, ie. as if it had
              never existed. The buyer of goods can return the goods and receive back the
              payment he made. At common law, the representee is not entitled to damages for
              loss suffered as a result of entering into the contract unless the false representation
              was made fraudulently. However, under the Misrepresentation Act 1967 the
              representee may also be awarded damages for negligent misrepresentation.

       (c)    A representation is a statement which affirms, denies, describes or otherwise
              relates to a statement of fact, rather than a statement of intention or belief.
              However, if a person who only has a belief or intention as to a matter chooses to
              state it as a fact, the statement is a representation of the matter stated and can be
              shown to be false by proof that it is incorrect. Representations may also be
              implied in certain circumstances.

       (d)    Representations may be made by words printed or produced by any means, which
              includes advertising on the Internet.

       (e)    The representee includes any person whom the representor, either actually or
              within their contemplation, intended the representation to reach and influence, and
              any member of the public who has acted on a representation addressed to the
              public. An Internet advertisement clearly reaches and influences any user who
              visits the website, and so any user is entitled to all the rights he would have had if
              the representation had been addressed to him individually.



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       (f)    A representation is deemed to have been false, and is therefore a
              misrepresentation if it is false in substance and in fact. If the discrepancy between
              the facts as represented and the actual facts would be considered material by a
              reasonable representee, the representation is false.

       (g)    The representation must be shown to have been false at the date when the
              representee altered his position because of it. Where an Internet advertisement is
              posted and then at a later date the representee alters his position in reliance on the
              representation, the representor is deemed to be repeating his representation at
              every moment during the interval unless he withdraws or modifies it.

       (h)    Fraudulent misrepresentation

              (i)     A misrepresentation is fraudulent if it was known or believed by the
                      representor not to be true when made. Fraudulent misrepresentation gives
                      rise to the remedies of rescission and damages. Beyond this, the
                      motivation of the representor in making the misrepresentation is
                      irrelevant.

       (i)    Innocent misrepresentation under the common law

              (i)     There are two categories of innocent misrepresentation, those made
                      without fault, and those made through negligence. Innocent
                      misrepresentation occurs when the representor honestly believes in the
                      truth of the representation. Under the common law, innocent
                      misrepresentation gives rise to the remedy of rescission.

       (j)    Negligent misrepresentation under the Misrepresentation Act 1967

              (i)     Where a person has entered into a contract after a misrepresentation has
                      been made to him and as a result he has suffered loss, then if the person
                      making the representation would be liable for damages if the
                      representation had been made fraudulently, that person will be so liable
                      even though the misrepresentation was not made fraudulently, unless he
                      proves that he had reasonable grounds to believe and did believe that the
                      facts represented were true. Therefore under the Act, as opposed to the
                      common law, the representor must prove his reasonable grounds for belief
                      rather than the representee having to prove that the representor failed to
                      take reasonable care.

.5     In English law there is also a common law duty in the tort of negligence to take care in
       making statements. An action in negligent misstatement requires a 'special relationship'
       between the plaintiff and defendant to constitute a duty to take care.

.6     Statutory Regulations

       (a)    There are also various statutory regulations which apply to all forms of advertising
              and which would include advertising on the Internet.




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        (b)       The Trade Descriptions Act 1968 makes it a criminal offence to apply a false trade
                  description to goods. This is a strict liability offence, so there is no need to
                  demonstrate an intent to commit it. There are also specific rules about the use of
                  unfair pricing, in particular in the case of advertising prices in a sale.

        (c)       While this legislation has not yet been used against an advertiser in the UK as a
                  result of an advertisement on the Internet, there is no reason to suggest that they
                  will not be used at some time.

     Summary

.1      Spamming and flame mails are not subject to specific legislation or regulation in the UK,
        other than self-regulation by the industry itself contained in Codes of Practice. However,
        when considering the position in the UK with regard to the sending of unsolicited e-mails
        for advertising purposes, the following will be relevant:-

                  advertisers need to collect a certain amount of data about their potential customers
                  in order to direct unsolicited advertisements to the most appropriate e-mail users.
                  The Data Protection Act 1998 governs how this data can be collected and used.
                  Under the Act, the consumer is entitled to serve on the advertiser a notice
                  requiring them to cease, or not to begin, obtaining, keeping or using the personal
                  data. A consumer who receives Spam, therefore, can prevent the advertiser
                  sending further e-mails. Further, the Act states that personal data can only be
                  obtained for the purposes specified in the Act.

.2      The DPA 98 will be relevant to Internet use whenever the Data Subject is on-line, whether
        the Data Subject has volunteered a response to a request for information, or has merely
        left an 'electronic trace'. Personal data must be processed fairly and lawfully and used
        only for the purposes specified in the Act.

.3      E:mail is a "publicly available telecoms service" and so parts of the Regulations do apply.
         It is unclear at the moment as to the extent that the Regulations apply; future amendments
        may expressly include the Internet in the ambit of the Regulations. For now, the sections
        concerning directories and security are particularly relevant to e:mail.

        The UK has not yet given specific consideration to the implications of advertising on the
        Internet. For now, however, ASA has indicated that BCAP could apply to advertising on
        the Internet. This includes the standards relating to the principles of fair competition
        generally accepted in the business and the regulation of comparative advertising.

Question 2.       The Use of Hyperlinks - General Overview

     Hyperlinks

.1      The use of hyperlinks by a website owner, to link to information on the website of another
        party, be it a competitor or simply another advertiser, is not the subject of any specific
        regulatory control in the UK.

.2      However, any legal right which could be infringed by a hyperlink would generally be
        protected in the same way it is protected in other circumstances.

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.3     The principal area of law which falls to be considered is the protection of intellectual
       property rights and more specifically copyright. Internet content can attract copyright
       protection as a literary work if it is original3. To be original the creation of the work must
       involve some amount of skill and labour. Only if the amount of skill and labour invested
       in them is non-existent4 or if the volume of these works is not substantial enough5, e.g.
       single words, will the literary work not be original.

.4     A Content Provider is entitled to take action under the Copyright, Designs and Patents
       Act 1988 (CDPA) for infringement of copyright against any subscriber who copies
       content from his web site.6 Where the subscriber contributes to a forum on the Internet,
       there may be copyright in that contribution which belongs to that subscriber as owner,
       unless it is assigned in writing. It is not unusual for the Services Provider in the contract
       with its subscribers to reserve for itself the right to edit, copy, publish, distribute etc. any
       information or software placed on the service by the subscriber. It is open to question
       whether such a provision could be regarded as an appropriate assignment of copyright for
       the purposes of the CDPA.7 An assignment is not effective unless it is in writing and
       signed by or on behalf of the subscriber.8 As terms and conditions are often displayed on
       screen and accepted by the click of a mouse, this may not satisfy the statutory provisions,
       and a contractual clause in the above form will be unenforceable.

.5     The protection of intellectual property rights in a digital, on-line environment, opens a
       whole new minefield of issues and potential liability for the service provider, advertiser,
       and any other party involved in the transaction. UK legislation is currently unclear on
       whether copyright owners are entitled to control all the rights in their copyright works
       which exist or are used in interactive on-line services. Such a vacuum in the law could
       have a huge effect on the future growth of the Internet. Copyright owners would be
       unwilling to authorise the use of their works on the Net if fears over piracy and
       unauthorised exploitation cannot be allayed.

.6     These concerns were borne out in the recent case of Shetland Times Limited -v- Shetland
       News.9

       (a)     This was the first UK case involving hypertext Links on the WorldWide Web and
               whether the owner of a web page had copyright in the information displayed on
               the web page (literary, graphics, musical, the programme service itself etc) and

       3
               Copyright, Design and Patents Act 1988, section 3 (1).

       4
               Libraco v Shaw (1913) 30 TLR 22; Kirk v Flemming (1928-1935) Mac CC44.

       5
               Exxon v Exxon Insurance (1982) Ch 119.

       6
               Susan Schulz 17 and 18.

       7
               S.90(1).

       8
               S.90(3).

       9
               Scottish Court of Session, October 1996.


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              furthermore, whether a third party needed consent for utilising that work. The
              plaintiff in this case was the owner and publisher of a local newspaper, The
              Shetland Times. The Shetland Times had a website containing news headlines
              and relevant articles ("www.shetland-times.co.uk"). The aim of the website was
              to sell advertising space on the home page, in addition to displaying articles and
              photographs from the published paper. The defendant was the owner of an on-line
              news service known as the Shetland News ("www.shetland-news.co.uk"). The
              Shetland News did not promote advertising space but rather generated news items
              from within the Shetland Islands.

       (b)    The defendant's on-line home page consisted of a number of headlines which the
              user could "click" on to view the article in its entirety. In October 1996, the
              defendant included in this list a selection of headlines which had appeared in
              published issues of the Shetland Times as reproduced on the plaintiff's website.
              When a user selected a particular article from the Shetland Times edition he was
              taken to the Shetland Times web page and directly linked into the article itself.
              This process was possible through the use of hyperlinks.

       (c)    The Shetland Times objected to their articles being linked to the Shetland News
              on the grounds that the user was not being directed to the Shetland Times home
              page which contained all the advertising and promotions. Most advertisements on
              the Internet operate on the basis of "hits" - the greater the number of people
              accessing a particular web page and requesting a file of information, the more
              advertisement revenue for the owner of the web page. The Shetland Times was
              concerned with this partial accessing of its website and initiated proceedings for
              infringement of copyright against the Shetland News, claiming:

              (i)    an infringement of copyright owned in the web page; and

              (ii)   that the headlines of the articles and their web pages were "cable
                     programmes" as defined under the Copyright, Designs and Patents Act
                     1988.

       (d)    Regarding the infringement of copyright claim, the plaintiff argued that the
              headlines from the Shetland Times which were copied on to the Shetland
              Newsweb pages were copies of a literary work owned by the Shetland Times.
              The defendant accepted that the words formulating the headline constituted a
              literary work but counter-argued that there was no originality as defined under the
              Act and accordingly they could not be regarded as original literary work. In his
              summing up, Lord Hamilton said that:

              "Since the headlines at issue involve eight or so words designedly put together for
              the purpose of imparting information, it appears to me to be arguable that there
              was an infringement, at least in some instances, of Section 17 of The CDPA
              1998". (Section 17 of The CDPA 1998 sets out the act of infringement by
              copying a copyright work without the consent of the copyright owner.)

       (e)    The plaintiff also wanted to stop the defendant from linking the two webs and
              therefore avoiding its own home advertising page. There could not be a claim for
              infringement of copyright since the Defendant had not actually copied any of the

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              Shetland Times News Articles or reproduced them on to their own website. The
              Plaintiff therefore proposed an alternative argument based on Section 7 of the
              CDP in 1988 which sets out the definition of "a cable programme".

              "A service which consists... in sending information... by means of a
              telecommunications system... for a reception... at two or more places (whether a
              simultaneous reception or at different times in response to requests by different
              users)... and which is not... excepted".

       (f)    By virtue of Section 20 of the CDPA 1988 the plaintiff claimed that the defendant
              had infringed his copyright in a cable programme:

              (i)     the website was a cable programme service as defined under Section 7 of
                      The CDPA 1998;

              (ii)    copying of the Shetland Times article headlines on to the defendant's
                      website constituted in effect an inclusion of the Shetland Times works or
                      cable programmes within a cable programme service without
                      authorisation; and

              (iii)   the defendant thereby infringed the Shetland Times copyright in the cable
                      programme service as defined by Section 7 since it involved the sending
                      of information:

       (g)    Lord Hamilton found the following:

                      "Although, in a sense, the information, it seems, passively awaits access
                      being had to it by Internet users, that does not, at least prima facie,
                      preclude the notion that the information, on such access being taken, is
                      conveyed to, and received by, the Internet user. If that is so the process
                      may arguably be said to involve the sending of that information... the fact
                      that information is provided to the Internet user by his accessing it
                      through the Defendant's website does not, in my view, result in the
                      Defendants being the persons sending the information".

       (h)    Lord Hamilton therefore granted an interim injunction to the Shetland Times.

       (i)    It is worth noting that Section 7(2)(a) of The CDPA 1989 provides an exception to
              the definition of a cable programme. Such exemptions would include "on
              demand" services such as video on demand and interactive on-line shopping. In
              this respect, Lord Hamilton held that the primary function of the Shetland Times
              was to distribute news and other items and not to engage in a two-way
              communication over the Internet which is a required characteristic of a service
              probably within the ambit of Section 7(2)(a).

       (j)    The actual Shetland Times case was settled out of court before the permanent
              injunction and the legal issues raised in the preliminary hearing could be
              determined by the court. Therefore the case does not set a legal precedent but
              provides an indication of the way in which a court may assess the use of copyright
              hyperlinks to web-pages under copyright law.

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        (k)     The issue of hyperlinks therefore remains unsettled and there have not been any
                further cases which have made it to the courts which address this issue. On the
                other hand, one could argue that linking websites is part of the reason for the
                worldwide web's success and facilitates a more user friendly environment. The
                ability to move between different web pages on related topics makes the
                worldwide web an effective tool for research and browsing generally. Clearly this
                issue needs to be addressed either by the courts or the legislature if use of the
                Internet is to be promoted as feature a tool for commerce.

     Metadata

.1      Meta tags in documents produced on the Internet are a common way to index the
        document with Internet search engines. Meta tags are hidden tags in the head of a
        document which can be used to provide information on the ownership and content of the
        document. Whereas some search engines index the first hundred lines of a document,
        others will used meta tags (if they are present) in preference. This is of increasing
        importance as it becomes more and more crucial to ensure that your website is visited by
        as many people as possible, either for advertising revenue or simply to publicise your own
        product.

.2      In order to achieve maximum exposure for their website, authors are beginning to abuse
        and exploit metadata utilisation in order to enhance the search engine ranking of their
        Web page. Primarily this is happening in two ways:-

                (i)    some web authors include keywords in their documents which bear no
                       relation to the subject of the document. An increasingly common trick is
                       for web authors to fill their meta tags with keywords relating to
                       pornography, even if their site does not contain this type of information.
                       As searches against this type of keyword are extremely common, this is an
                       effective way of boosting the hit rate of a site.

                (ii)   keyword spamming can also be used to enhance the search engine ranking.
                        The same keyword is repeated several times in meta tags in order to force
                       the site higher up a search engine's list of hits. The greater the frequency
                       of the keyword, the more relevant the search engine believes the page to
                       be and so the site is higher in the list.

.3      These is no specific legislation in the UK at present to cover the abuse of metadata.
        However, search engines are beginning to take active measures against keyword
        spamming by ignoring keywords which appear more than six or seven times in a row.

.4      Several cases have been decided in the United States where damages have been awarded
        or injunctions made for the use of a trademarked term in meta tags. For example, in
        Oppedahl & Larson v Advanced Concepts10, the plaintiff was a law firm dealing in
        domain name disputes. With no clear reason, the defendant used the plaintiff's name in its
        meta tags. There was an impression that the defendant hoped to capture traffic that would
        gain it domain name registration fees. The court banned it from using the name without
        10
                No. 97-Z-1592 (D.C. Colo., 23 July, 1997)

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        authorisation. In Playboy Enterprises Inv v Calvin Designer Label11, the plaintiff sued
        two adult web site operators who spammed their pages with the words Playboy and
        Playmate hundreds of times. This helped them to rise to the top of some search engines
        for a search on "Playboy". The judge issued a preliminary injunction, deciding that
        trademark infringement might be proved at trial.

     Databases

.1      Although Service Providers will usually sub-contract services to Content Providers, much
        of the information provided or "collected" on the service will form databases of
        information, such as those collected in forums, and be part of the direct Service Provider
        service. Though Service Providers are unlikely to have copyright in the contents of these
        forums - because they belong to others - they may have copyright in the compilations of
        data particularly where they are arranged and selected by the Service Providers.12 Service
        Providers facilitate the appearance on the screen, structure and sequence of forums and as
        a result may have a copyright in this aspect of the service. If their work does not have
        copyright for lack of originality they may now have a sui generis right for databases. This
        right was introduced by the Copyrights and Rights in Databases Regulations 1997, which
        implemented the 1996 EC Databases Directive, to prevent the unauthorised extraction
        and/or reutilisation of data from such forums or, say, an online encyclopaedia.

.2      A database will be within the scope of the amended CDPA if it consists of a collection of
        independent works, data etc. arranged systematically or methodically and whose contents
        are individually accessible by any means13. This definition is very broad. It would include
        a set of ring binders containing pages on different topics or an encyclopaedia on CD-
        ROM. It would exclude databases whose accessible (to the end user) contents are
        automatically calculated from other data in the database. An example would be a stock
        market database which displayed to the user averages of share prices calculated from the
        individual share prices which formed its contents.

     Domain names

.1      As in other jurisdictions, the problem arises how the owner of a trade name can proceed
        against the registration of his name as a domain name by another person. Under English
        law, possible remedies are actions under the law of passing off or under the UK Trade
        Marks Act 1994.




        11
                 No. C-97-3204 (N.D. Cal., 8 Sept., 1997)

        12
                 See Dun & Bradstreet v Typesetting Facilities [1992]FSR 320.

        13
                 Databases Regulations, ibid. section 3 (a) (1).


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.2     Passing off-: Passing off is a non-codified tort which provides a remedy against
       misrepresentations in the course of trade. In this common law action, the plaintiff has to
       establish that he acquired goodwill or reputation in his name, that he was misrepresented
       by the use of his name by another trader and that he suffered damage from this use14. The
       first rule which derives from these requirements is that there is no protection for a name in
       relation to which a trader has not yet acquired goodwill or reputation. Secondly, the use
       by another trader must lead to confusion on the side of the public. The name must come to
       be associated in the minds of the public with its owner.15 In relation to domain names, this
       creates the problem that no confusion takes place where a known name is merely
       registered as a domain name but not being used. However, in the case BT and others v
       One in a Million16 it was held that although passing off was not yet established in these
       circumstances, an injunction could be granted since it sufficed that the defendant’s
       conduct was calculated to infringe the plaintiff’s right. The judge was satisfied that there
       was a threat that the domain name would be used and that this use would be likely to
       deceive the public. He rejected the argument that the defendant never intended to use the
       name since the blocking of the domain name implied the threat that the domain name
       would be used or sold to a third party. It was held that any person who deliberately
       registers a domain name on account of its similarity to the name, brand name or trade
       mark of an unconnected commercial organisation must expect to find itself on the
       receiving end of an injunction to restrain the threat of passing off, and the injunction will
       be in terms which will make the name commercially useless to the dealer.

.3     It should be noted that there is no other English law protecting trade names and, in
       particular, no unfair competition law.

.4     Trade Mark Law:- The Trade Mark Act 1994 implemented the EC Trade Mark
       Directive17 and is therefore in its basic provisions almost identical to the corresponding
       provisions in the German Trade Mark Act. In practice, trade marks were successfully used
       in the United Kingdom to proceed against occupants of domain names18. In most cases the
       domain name will not be used in relation to goods similar to the goods the trade marks is
       used for. As a consequence, section 10 (3) Trade Mark Act 1994 will be applied which
       requires that the trade mark has a reputation and that the alleged use takes unfair
       advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
       There has to be a case of exploitation, dilution or impairment of the mark. In BT and
       others v One in a Million, the judge accepted that the trade marks in question were being
       diluted by the use of the domain name. In the same case, the defendant’s argument that his
       registration of several well known trade marks as domain names was not "use in the
       course of trade" as required by the Act was rejected. The judge held that use in the course
       of a business of a professional dealer for the purpose of making domain names more
       valuable and extracting money from the trade mark owner was "use in the course of

       14
               Reckitt & Colman Products Ltd v Borden Inc (1990) 1 All ER 873.

       15
               Pitman Training Ltd v Nominet UK (unreported), 22 May 1997, Ch 1997 F 1984.

       16
               The Times 2 December 1997.

       17
               89/104/EC (1988) OJ L40/1.

       18
               Harrods v Michael Lawrie 1996 H 5453, 9 December 1996; BT and others v One in a Million,
       ibid.

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        trade". At the same time he explained that "use in the course of trade" does not mean "use
        as a trade mark", a term which means that the mark has to be used in relation to goods and
        as an indication of their origin.

     The Copyright Directive

.1      In December 1997 the EU finally published its "Proposal for a Directive on Copyright and
        Related Rights in the Information Society" (the "Copyright Directive"). The Copyright
        Directive represents the most significant attempt by the Commission to grapple with
        copyright problems posed by digital media, particularly the Internet. It lays the foundation
        for national legislation harmonising aspects of rules on copyright and related rights in the
        information society throughout the EU and to foster confidence in the Internet as a
        business medium whilst challenging on line copyright piracy. The copyright directive
        applies to rights in three areas:

                (i)     copying;

                (ii)    communication to the public (including protecting material on-demand
                        over the Internet); and

                (iii)   distribution.

.2      The copyright directive will also seek to establish legal protection against illicit copying
        devices and also against the illicit alteration of electronic rights management information.

     Reproduction Rights

.1      The proposed Copyright Directive will grant authors, performers, phonogram and film
        producers and broadcasting organisations and the exclusive right to authorise or prohibit
        reproduction. The reproduction right will cover all relevant acts of direct or indirect
        reproduction, temporary or permanent, whether on-line or off-line, in material or
        immaterial forms. The proposal provides for an obligatory exception to this right for
        certain technical acts of reproduction "dictated by technology" but which have no separate
        economic significance" of their own such as temporary "cached" copies during Internet
        transmissions.

.2      Furthermore, member states will have the option of allowing additional exceptions in
        respect of the following:

        (i)     photocopying, or "reprography" (i.e. copying on paper or similar support by using
                any kind of photographic technique or other processes with similar effects);

        (ii)    private copying; i.e. reproductions on audio, visual or audio-visual recording
                media made by private individuals for private use and non-commercial ends); and

        (iii)   specific acts of copying by public libraries, museums and other establishments
                accessible to the public, which are not for direct or indirect economic or
                commercial advantage.




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.3      These optional exceptions will allow member states to maintain current systems for
        compensating right holders for pirate copying or photocopying. This would include blank
        tape levies and levies of photocopiers and photocopies. The copyright directive will not
        introduce any obligation on member states to introduce such levies or harmonise their
        level.




Question 3.    Limitations for online marketing of specific products

     General Overview

.1      In addition to the British Codes of Advertising and Sales Promotion (discussed under
        paragraph 11 of Question 1), the advertising of specific products is subject to further
        regulation in the UK, by way of voluntary codes and legislation.

     Tobacco Products

.1      Advertising of tobacco products in the UK is regulated by the Cigarette Code, a self-
        regulation code drawn up by the tobacco industry and the UK Department of Health.
        Compliance with the Code is supervised by the Advertising Standards Authority (ASA).

.2      ASA deals with complaints about advertisement content and also supervises the pre-
        clearance procedure for cigarette advertisements.

.3      Advertisements should have a signed, dated and numbered certificate of clearance from
        the Committee of Advertising Practice (CAP) before they are displayed or published.
        Clearance can be universal or may be media specific in that certain advertisements might
        only be acceptable for publication in a limited circulation medium. This could be used to
        exclude Internet advertising.

.4      CAP clearance does not automatically protect advertisements against complaints to the
        ASA.

.5      The sanctions available to the ASA include denying access to advertising space and
        adverse publicity as a result of rulings published in ASA's Monthly Report.

.6      The Cigarette Code applies to cigarettes and hand-rolling tobacco, but not to cigars or
        pipe tobacco.

.7      ASA has stated that the Rules contained in the Code should be observed in the spirit as
        well as in the letter. The Rules include the following:-

        (a)    no advertisement should incite people to start smoking or increase their
               consumption of cigarettes

        (b)    advertisements should never suggest that smoking is safe or healthy




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        (c)    smoking should not be associated with social, sexual, romantic or business
               success, nor with people who are evidently wealthy, fashionable, sophisticated or
               successful

        (d)    advertisements should avoid employing any approach which is more likely to
               attract the attention of those under the age of 18

        (e)    anyone shown smoking should be clearly seen to be over 25

     Alcohol

.1      ASA also supervises compliance with rules drawn up by the drinks industry which
        regulate advertisements for alcohol.

.2      These rules include the following:-

        (a)    advertisements for alcoholic drinks should not be directed at the under 18s

        (b)    advertisements should not suggest that a drink will lead to social, sporting or
               sexual success

        (c)    high alcohol content should not be used as the basis of any advertisement

        (d)    advertisements should not encourage or condone excessive consumption of
               alcohol

     Medical Products

.1      The only products which appear to be specifically prohibited from being marketed on the
        Internet are prescription only medicinal products.

.2      The promotion and sales of medicines is regulated by the Medicine Act 1968. The law is
        concerned with protecting consumers from inappropriate advertising. It is an offence
        under the Act to issue an advertisement of a medicine which includes anything which may
        mislead as to the purposes for which the product may safely be used, the purposes for
        which it cannot safely be used, or as to the effects of the drug.

.3      There is also a ban on advertising prescription-only medicines directly to the public.
        These may only be marketed to health professionals and the contents of the
        advertisements are prescribed by the Medicines (Advertising) Regulations 1994.

.4      Medicines for the treatment of certain conditions of diseases are considered to be so likely
        to give rise to misleading adverts that advertising to the public is also banned. These
        include treatments for venereal diseases, cancer, bone diseases, cardiovascular diseases,
        chronic insomnia, diabetes and other metabolic diseases, diseases of the liver, biliary
        system and pancreas, endocrine diseases, genetic disorders, psychiatric diseases, serious
        disorders of the ear and eye, serious gastrointestinal diseases, serious infectious diseases
        such as HIV-related diseases and tuberculosis, serious neurological and muscular
        diseases, serious renal diseases, serious respiratory diseases and serious skin diseases.



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.5      Advertisers may not make unsubstantiated claims that the product is superior to any other,
        suggest it is safe without qualification or use unfairly presented or irrelevant graphs.

.6      Advertising is, of course, only possible for medicines are properly licensed. Moreover, no-
        one can advertise the licensed product without the licensor's consent.

     Financial Services

.1      Advertisements for investment products such as unit trusts, life assurance plans, pensions
        and stock market advice fall under the Financial Services Act 1986 ("FSA") , which
        regulates the form and content of such advertisements. The FSA treats certain
        advertisements which emanate from abroad as being issued within the UK (and therefore
        regulated by the FSA) if the advertisement is directed to or made available to persons in
        the UK. This raises difficult questions regarding the origin of advertisements on the
        Internet.

.2      The FSA states that investment advertisements must be placed or approved by a person
        (firm or individual) authorised to carry on investment business in the UK. Authorisation is
        obtained by membership of a self-regulating organisation (SRO) such as the Securities
        and Futures Authority, or by certification from a Recognised Professional Body (RPB)
        such as the Law Society (the governing body of solicitors in England and Wales). An
        investment advertisement is defined as being an advertisement which invites persons to
        enter into an investment agreement. "Investments" includes shares, debentures, gilts,
        units or shares in collective investment schemes, options and futures. 'Advertisement' is
        defined to include every form of advertising, so appears to include Internet advertising.
        The sanctions for contravention of these restrictions include criminal penalties (up to 2
        years' imprisonment, a fine or both) and the unenforceability of the transaction as against
        the investor.

.3      The Act gives the Securities and Investments Board, now the Financial Services
        Authority, the power to formulate a series of rules codifying best practice for investment
        business. An investor can sue for damages resulting from a breach. These Rules include
        the following:-

        (a)     advertisements must be clear and fair, taking account of the financial
                sophistication of the reader. This has particular relevance to the Internet where
                access to an advertisement is available to all rather than a specialist financial
                audience. Where a firm issues investment advertisements which are lawful only if
                directed solely to market professionals, it needs to ensure that its Website is set up
                to provide adequate protection against access by people outside the permitted
                class, ie. an effective "gatekeeper" policy is needed;

        (b)     if the advertisement stresses the tax advantages of investments, it must state that
                existing tax arrangements are subject to variation;

        (c)     past performance records of investments contained in the advertisement must be
                relevant and not misleading;

        (d)     in all but a few excepted cases, advertisements must indicate the risks associated
                with the investments advertised. This warning must be conspicuously shown and

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                must include appropriate references to the volatility of investments. This issue
                causes particular difficulty for Internet use. For example, in the hard copy of an
                advertisement, the risk warning may appear on the front page. But visitors to the
                corresponding web site may enter at any page, perhaps by means of a hyperlink
                from another page, and therefore miss the warning on the first page. Does this
                mean then that the warning needs to appear on every page that refers to the
                investment product?

.4      Another problem associated with the advertisement of financial services on the Internet is
        its interactive nature. A Website can guide a customer through investments products
        according to the customer's answers to scripted questions. This raises the problem of
        whether the advertisement has gone beyond pure advertising and has become the giving of
        "investment advice". Under the FSA, a firm that gives investment advice must be
        authorised to do so. Additional regulations apply to the giving of investment advice, such
        as ensuring the product is suitable for the customer by undertaking a factfind about the
        customers means and needs. A Webpage can ask its scripted questions but cannot react to
        any information which is not provided for in the script, which compromises the ability of
        the firm to comply with the suitability requirement.

.5      In addition, SROs and RPBs have their own advertising codes with which member firms
        must comply, which broadly reflect these Rules.

.6      Advertisements covering credit and loans are regulated by the Consumer Credit Act 1974
        and are supervised by Trading Standards Departments.

.7      ASA covers advertisements for banks' and building societies' current and deposit
        accounts. Specific rules include the following:-

        (a)     the nature of the contract, including any limitations, expenses, penalties, charges
                and the terms of withdrawal should be made clear;

        (b)     the basis used to calculate rates of interest, forecasts or projections should be
                clear;

        (c)     advertisements should make clear that the value of investments is variable and can
                go down as well as up, and that references to past performance do not necessarily
                prove future success.

Question 4.     Limitations for on-line marketing for specific persons

     Minors

.1      The advertising Codes contain several provisions concerning marketing to minors, such as
        rules dealing with advertising and promotion which is addressed to minors. They do not
        distinguish between the means of advertising or the media being used but rather look at
        the content of the advertisements. Although no complaints have been filed concerning e-
        mail advertisements in relation to minors it is likely that the ASA will apply the rules to
        Internet advertisements.

     Lawyers, doctors and dentists advertising their services on the Internet

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.1     The UK has a long tradition of the regulation of competition by collective professional
       bodies in the field of law and medicine. These bodies also enforce standards and promote
       good practice. Self-regulation plays an important role in relation to the control of
       professional conduct.

.1.1   Lawyers - Solicitors

       (a)    A solicitor in England and Wales may publicise his practice but must comply with
              the Solicitors Practice Rules 1990 promulgated by the Council of the Law Society.
              The Law Society has the power to establish self-regulatory rules for its members
              under section 31 of the Solicitors Act 1974 and section 9 of the Administration of
              Justice Act 1985. It has also set up further rules concerning publicity in the
              Solicitors' Publicity Code 1990. Although these provisions lack the force of law
              there is a system of guidance of professional behaviour of solicitors in accordance
              with the practice rules.

       (b)    Professional misconduct and inadequate professional services, including serious
              or persistent breaches of the Publicity Code, can be investigated by the Solicitors
              Complaints Bureau (SBC) which has several powers relating to this task. For
              example, it can institute disciplinary proceedings before the Solicitors'
              Disciplinary Tribunal and can, as an ultimate sanction, strike the solicitor off the
              roll.

       (c)    Section 3 of the Solicitors' Publicity Code 1990 states that solicitors may not
              publicise their practice by means of unsolicited visits or telephone calls. However
              the Law Society considers unsolicited e-mails not to be the equivalent to an
              unsolicited visit or call, because they lack the intrusive nature which is inherent of
              calls and visits.

       (d)    On the other hand, the Law Society considers that websites advertisements do fall
              under the scope of the Publicity Code. Therefore the advertisement should fully
              comply with the rules set out in the Code. The rules include prohibition of success
              rates, prohibition of comparisons with other solicitors and the identification of
              solicitors in an advertisement. There are also references to other laws dealing with
              advertisement which the solicitor has to meet.

       (e)    Paragraph 14 of the Publicity Code applies to publicity conducted in a jurisdiction
              other than England and Wales. It states that the publicity must be in accordance
              with the national rules implied in the Code and also with the restrictions in
              lawyers' publicity of the country where it is received. As websites are accessible
              worldwide and the place of reception might be difficult to determine, the Law
              Society reduces the relevant jurisdiction to the one at which the website is
              "primarily targeted".

.1.2   Doctors

       (a)    The governing body for doctors is the General Medicine Council (GMC), and its
              rules are set out in the Medical Act 1983. This self-regulatory body has a
              disciplinary function and can remove doctors from the medical register if they are

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                 unfit to practice due to serious professional misconduct. The interpretation of this
                 term is left to the GMC to determine. In November 1997 the GMC published
                 guidelines dealing with the provision of information about the service.

.1.3    Others

        (a)      There are other group of commercial users which have published codes of conduct
                 with specific emphasis on marketing via the Internet.

        (b)      The British Bankers' Association (BBA) and the Building Societies' Association
                 (BSA) have general rules regulating their relations with customers in the Banking
                 Code 1990, including rules concerning marketing of services. These aim more at
                 the content of advertisements rather than the means of advertising. However in the
                 Code of Conduct for the Advertising of Interest Bearing Accounts published in
                 January 1999, the BBA and the BSA considered the term "advertisement" to
                 include delivery of an advertisement by electronic means, eg via the Internet.

Question 5. To what extent are there any information duties with regard to commercial
      websites?

     Misrepresentation

.1      Misrepresentation, whether innocent, negligent or fraudulent will be relevant to the
        information contained in a commercial Website; whenever a representor makes a false
        representation to a representee which has the result of inducing the representee to enter
        into a contract with him, the representee may generally elect to treat the contract as
        rescinded. For a more detailed discussion of the law of misrepresentation in the UK, see
        page 15.

.2      The general rules of negligent mis-statement apply to information given over the Internet
        in the same way as it applies in all other spheres.

.3      Any company providing advice, for example via a website or by the e-mail, owes a duty
        of care to a recipient who reasonably relies on that advice. Since a company website
        (offering, for example, financial advice) or an e-mail is likely to be identified with a
        company, the company will be liable in the event that such advice is negligent and causes
        damage to the recipient.

     Distance Selling Directive

.1      As already discussed, the advertising Codes contain information requirements which
        could apply to the provision of information on a website. In addition an EC Directive
        (97/7/EC) on the protection of consumers in respect of distance contracts, known as the
        "Distance Selling Directive" was adopted on 20 May 1997. It must be implemented by
        Member States by 4 June 2000. Few aspects of distance selling are currently subject to
        statutory regulation in the UK (beyond that which applies generally to the sale and supply
        of goods and services - satisfactory quality and fitness for purpose for products;
        reasonable skill and care for services).




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.2     The Directive has not yet been implemented in the UK and is presently undergoing
       consultation. The DTI published its consultation document in June 1998 which sets outs
       proposals for the new regime in the UK.

.3     The Directive requires the consumer to be provided with the information set out in Article
       4.1, in a clear and comprehensible manner and in good time before the conclusion of any
       distance contract. The information concerned includes:-

       (a)     identity of the supplier, and their address if payment is made in advance;

       (b)     main characteristics of the goods or services;

       (c)     price of the goods or services, including tax;

       (d)     period for which the offer or price remains valid;

       (e)     delivery costs, where appropriate;

       (f)     arrangements for payment, delivery and performance

.4     The DTI suggest that a method of enforcement of these provisions could be that a supplier
       who failed to give the consumer the required information would be unable to enforce the
       contract against the consumer. Persisting in a course of conduct of omitting the required
       information could also lead to action being taken by the Director General of Fair Trading
       under the Fair Trading Act 1973.

.5     Article 4.2 of the Directive states that the information in Article 4.1 is to be provided with
       regard to principles of good faith. This concept is difficult to implement into UK law,
       although the Unfair Terms in Consumer Contracts Regulations provide some precedent.
       An option for enforcement would be to make contracts unenforceable against the
       consumer where these principles have not been taken into account, but only consumers
       who are aware that the contract is unenforceable will have the benefit of this protection.

.6     The Directive gives consumers (inter alia) the following rights:-

       (a)     a general right to a seven-day cancellation period without penalty and without
               giving good reason and reimbursement of payments as soon as possible and in any
               case within 30 days;

       (b)     the supplier must execute the order within 30 days unless otherwise agreed;

       (c)     the right to cancel distance transactions made by credit card where the card has
               been used fraudulently; and

.7     Enforcement of these provisions in the UK could involve criminal sanctions, self-
       regulation or action by the Director General of Fair Trading.

.8     Article 10(2) of the Directive requires that direct distance communication by means of
       telephone, mail and e-mail should only be used for marketing and selling where there is
       no clear objection from the consumer. Options for implementation in the UK include

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        either an opt-in or opt-out system, whereby the consumer can register his willingness or
        objection to receive such communications.




Question 6.     Netiquette and self-regulation

        "Netiquette" is an unofficial code of practice which has evolved amongst regular users of
        the Internet, and is a particularly effective form of regulation. These informal codes of
        conduct, like the Internet itself, are not restricted by national boundaries. However, the
        UK has codes of practice of the relevant trade associations, such as that published by the
        Internet Service Providers Association, as discussed under question 1. This Code requires
        members to use their reasonable endeavours to ensure that the services they provide, for
        example:-

        (a)     are not of a kind likely to mislead by inaccuracy, ambiguity, exaggeration,
                omission or otherwise
        (b)     clearly state the up-to-date relevant charges and whether they are inclusive or
                exclusive of VAT
        (c)     make it clear to Data Subjects the purpose for which the collection of personal
                information will be used

        The Code also requires members to develop and Acceptable Use Policy and require their
        customers to adhere to it. As already discussed, the sanctions for breach of this Code
        include requiring the member to remedy the breach, requiring the member to reimburse to
        the customer any service charges paid and suspending the member and publicising that
        fact.


PROCEDURAL RULES


Question 1. Which principles are applied to solve the problems of private international
      law?

     General Overview

.1      Advertising and marketing on the Internet raises various issues relating to jurisdiction, for
        example:-

        (a)     compliance with local laws;

        (b)     in the event of a dispute, the choice of court to initiate legal proceedings;

        (c)     the governing law of a contract;

        (d)     enforcement of judgments in foreign jurisdictions.



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.2      There is no single set of advertising regulations or an advertising body which governs the
        content of advertisements a web site. To add to this confusion, local laws governing
        advertising vary according to a country's moral, religious and cultural standards. For
        example, the French law on tobacco advertising is particularly stringent compared to other
        jurisdictions within the EU. What one cannot say definitively is whether the French laws
        governing the advertising of tobacco apply to web sites which are hosted outside France
        but can be viewed by French consumers within France.

     Applicable Law

.1      If a particular court has jurisdiction over a particular dispute, then that court can decide
                which is the correct law to apply.

.2      Tort

        (a)    The choice of law rules for determining the law applicable to torts are contained in
               the Private Internal Law (Miscellaneous Provisions) Act 1995 (the "1995 Act"),
               Part III. The general rule is that the applicable law is the law of the country in
               which the events constituting the tort occur. As already discussed though, the
               question is not easy to determine when looking at cross-border electronic
               commerce on the Internet. However, if it appears, in all the circumstances, from
               a comparison of the factors which:-

               (i)     connect the tort with the country whose law is applicable under this
                       general rule; and

               (ii)    any factors connecting the tort with another country

               that it is substantially more appropriate for the applicable law to be the law of the
               other country, the general rule is displaced and the applicable law is the law of the
               other country.

        (b)    It is also provided that nothing in Part III of the 1995 Act authorises the
               application of a foreign law which would conflict with principles of public policy.

.3      Contract

        (a)    If it is an English court which has jurisdiction, it will apply the rules of the Rome
               Convention (the "Convention"), brought into force in the UK by the Contracts
               (Applicable Law) Act 1990, although only where the contract in question has a
               'foreign element'. If there is no connection at all between the contract and another
               contract, there can be no question of choice of laws. Further, the applicable law
               will only be considered in questions of substantive law; where a question of
               procedure is concerned, the English courts will apply their own rules.

        (b)    Article 3 of the Convention provides that a contract shall be governed by the law
               chosen by the parties. If the parties have not expressly chosen a particular law, the
               presumptions in Article 4 will normally decide the matter. The general rule in
               Article 4(1) is that the contract will be governed by the law of the country with
               which it is most closely connected. Article 4(2) says that there is generally a

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                presumption that this is the law of the party who is to effect 'characteristic
                performance'. For instance in a sale of goods contract, the party who sells and
                delivers the goods will be the party who effects characteristic performance rather
                than the party who pays. Thus the court would look at the seller's principal place
                of business. Therefore in the case of Internet advertising, the presumption the
                court must apply is to look at the place of business of the entity who places the
                advert. However, there are special rules relating to consumer contracts - in this
                case, the courts must apply the law of the country of the consumer's habitual
                residence. Even if there is an express choice of law in the contract, this cannot
                deprive the consumer of the protection given to him by the mandatory law of his
                country.

Question 2      How can national regulations be enforced in other states?

     Jurisdiction - General Overview

.1      Where the parties involved are domiciled in the EU/EFTA, the Brussels Convention on
        Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (EU) or
        the Lugano Convention(EU + EFTA) will apply. The Civil Jurisdiction and Judgments
        Act 1982 (CJJA) brought into force in England the Brussels Convention to which all the
        EU member states are signatories and which governs jurisdiction and the enforcement of
        judgments within the EU. The general rule is that defendants will be sued in the court of
        the jurisdiction in which they are domiciled.

.2      Forum non conveniens

        (a)     Where a defendant is domiciled in England, the English courts may grant a stay of
                proceedings if the defendant can show that the court of a non-Contracting State
                would be a more appropriate forum for the action19. The court will grant this stay
                on the grounds of 'forum non conveniens'.

.3      If neither the Brussels or Lugano Conventions (the "Conventions") apply, the English
        courts will traditionally accept jurisdiction where the defendant has actually submitted to
        that jurisdiction or where he is present in England at the time he is served with the writ.

.4      Unless the defendant submits to the jurisdiction, the English courts will only give leave
        for service out of the jurisdiction where it believes it would be proper to do so. The courts
        will consider (among other things) whether the plaintiff has made out a prima facie case
        and whether England is the most appropriate forum for the case to be tried having regard
        to the interests of all the parties and the requirements of justice. The court will look at
        such things as which law governs the contract, the nationality of the parties and where
        they are situated.

.5      In a tort claim, the English courts may grant service outside the jurisdiction if the damage
        was sustained, or resulted from an act committed within the jurisdiction.

     Jurisdiction and the Internet
        19
               s49(3) of the Supreme Court Act 1981 and see Re Harrods (Buenos Aires) Ltd
        [1991] 3 WLR 397.

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.1     There have been several cases recently in which jurisdictional issues became fundamental
       to the outcome of the action. For example in 1995, in one of the first significant cases on
       the Internet, Virgin Atlantic Airways was fined $14,000 by the US Department of
       Transportation for breach of Regulations regarding the advertising of airfares. It is an
       offence in the US to advertise airfares which exclude taxes in any quoted price. Virgin
       had set up a website within the UK advertising its airfares but without including taxes
       (permitted under UK laws).

.2     The US Department of Transportation took issue with these price quotes claiming that
       they fell foul of the US Regulations, notwithstanding the fact that the website was based
       outside the US, since they were accessible to US consumers. Accordingly, a foreign
       government was able to assert jurisdiction over a website outside its normal jurisdiction
       on the grounds that it could be accessed by consumers within its jurisdiction.

.3     The issue of jurisdiction arose more recently in Mecklermedia v. DC Congress20. The
       plaintiff was an English company involved in the organisation of three UK trade shows
       using the name "Internet World". The plaintiff's US parent company had published a
       magazine under the same name in the USA and UK. The plaintiff also owned two web
       sites using the name "Internet World" (www.internet-world.com).

.4     The defendant, a German trade show organiser, established a German website under the
       domain name "www.internetworld.de", as a means of promoting its own trade shows to be
       held in Germany.

.5     The plaintiff claimed that by virtue of Article 5(3) of the Brussels Convention, it was
       entitled to sue the defendant in England for the English tort of passing-off, under the
       provisions of the CJJA. The plaintiff brought an action of passing-off against the
       defendant in the English courts. The defendant in turn argued that the English courts did
       not have jurisdiction to hear the case and determine the claim.

.6     As already discussed, article 5(3) of the Brussels Convention confers jurisdiction in tort
       cases on the courts of the state where the tort has been committed or the state where the
       harm caused by the tort occurred. In Mecklermedia, the court inferred that the plaintiff's
       goodwill in England could be damaged by the defendant's use of the name, and therefore,
       an arguable case had been made out for the presence of the three elements constituting
       passing-off (goodwill, misrepresentation and damage). It also held that the harmful event
       could not be said to have occurred in Germany since the harm was to the goodwill in
       England and all the components of liability of the tort occurred in England.

.7     As a result of this judgment, whenever the owner of intellectual property rights is
       domiciled within the EU he can bring proceedings for infringement of those rights within
       any EU jurisdiction in which he has suffered damage as a result of that infringement. This
       is regardless of where the actual website is established and operated by the defendant.




       20
              Mecklermedia v. DC Congress [1997] 3 WLR 479.

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.8       The question of jurisdiction and cross-border electronic commerce over the Internet has
         been returned to a state of flux recently with the publication of the "Proposal for a
         European Parliament and Counsel Directive on Certain Legal Aspects of Electronic
         Commerce in the Internal Market"21. The proposals have already come under a barrage of
         criticism, in particular with regard to its focus on "home country control". This states
         that, when advertising on the Internet, the web site operator need only concern himself
         with the laws of the country in which his business is established and not those of the
         jurisdiction in which the web page can be accessed by the consumer.

.9       As a result of this proposal, in contrast to the Virgin Atlantic decision, US consumers
         would not have a right of action against the airline for breach of their rights under local
         laws so long as the website complied with UK laws governing content. The US consumer
         would only have a cause of action against the UK web site operator if his rights under UK
         consumer legislation were infringed. Accordingly, such an action would be brought in the
         English courts and not in the US (where the harm was suffered). The Directive is
         therefore an effective reversal of the Mecklermedia and Virgin Atlantic cases on this point
         of jurisdiction.

.10      Obviously, this gives effect to logic and business efficacy as it would be impractical (or
         indeed impossible) to ensure compliance with the laws of every jurisdiction in which the
         web page could be accessed. Unfortunately, it also represents an erosion of the consumer's
         rights under his local laws, to seek redress where those rights have been infringed.

      Interim or injunctive proceedings

.1       Even where the court of one Contracting State has jurisdiction over the substance of a
         matter, the Conventions allow parties to apply to the court of a different Contracting State
         for interim relief. In England this might be important, for example, if one of the parties
         wished to obtain a Mareva injunction22 against the other. Although the English courts
         have the power to grant interim relief of this type in England, case law suggests that
         where substantive issues are to be tried by the court of another jurisdiction, the English
         courts will only make a Mareva order in exceptional circumstances.

      Global Injunctions

.1       An interesting and equally important point regarding jurisdiction arose in Playboy
         Enterprises Inc v. Chuckleberry Publishing Inc23, regarding the scope of a national
         injunction which is a US case and therefore has no legal force in English courts but which
         nevertheless demonstrates a question not yet resolved in the UK.

         (a)     The plaintiff was Playboy Enterprises, a Delaware Corporation which published
                 magazine known as "Playboy".


         21
                 Brussels, 18 November 1998 COM (1998) 586 Final (the "Directive")
         22
                 As amended by the Civil Procedure Rules due to come into effect on 26 April
         1999.
         23
                 Playboy Enterprises Inc v. Chuckleberry Publishing Inc 939 F SUPP 1032

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                                            36
       (b)    Tattilo SPA (the Second Defendant) launched the publication of a new, but
              similar, magazine in Italy called "Playmen". Tattilo SPA planned to launch an
              English language version of "Playmen" in the US. The exclusive worldwide
              rights to publish this magazine were licensed to Chuckleberry (the First
              Defendant).

       (c)    In 1980 a preliminary injunction was granted against the defendant's use of the
              title "Playmen" for its US magazine, on the grounds that it was likely to cause
              confusion in the US among consumers. A permanent injunction was granted
              against the defendant in 1981, but the Second Defendant persisted with its use of
              the title.

       (d)    In 1995 they launched the website "www.playmen.it" from Italy. Consumers
              accessing the website could view images from the defendant's magazine and could
              specifically subscribe for a full copy of the magazine. Playboy Enterprises argued
              that use of the phrase "Playmen" within the domain name was an infringement of
              the injunction granted previously prohibiting the sale and distribution of the
              magazine Playmen in the US. The defendants counter argued that there had been
              no distribution of the magazine in the US by virtue of only posting images on their
              server in Italy, notwithstanding the fact that US consumers were able to access
              this web page.

       (e)    The US court found in favour of Playboy Enterprises and held that the fact that the
              defendant was accepting subscriptions from the US consumers could be regarded
              as a distribution within the US, and consequently it fell foul of the 1981
              injunction.

       (f)    As a result of this case, it is possible for an injunction granted in one jurisdiction
              to encompass activities on the Internet based in another jurisdiction, regardless of
              where the website is actually based (although it has yet to be seen how this ruling
              will hold in the light of the proposed EU "home country control" principal
              discussed above).

.2     This question has obvious implications for the application of EC competition rules and in
       particular those contained in the EC block exemption on exclusive distribution which
       enable a supplier of goods to prevent an exclusive distribution from "actively selling"
       outside its territory. Whether or not advertising on the internet would be classified as an
       active or a passive sale is not yet clear as a matter of UK (or EC) law.




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