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
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.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
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.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
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.DOC
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.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);
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.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.
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.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
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(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;
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(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
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.DOC 5
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)).
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.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).
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.DOC 7
(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;
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.DOC 8
(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.
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.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.
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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
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.DOC11
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.
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.DOC17
.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.
ALD5/7D4FD37E-93E9-434F-AE97-6DA847A125DD.DOC18
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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(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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