Current Legal Issues for E business
Legislation to support the development and implementation of new Information and Communication Technology (ICT) and reduce barriers to the adoption of E Business is an important indicator for economic success. While the EU’s legal and regulatory framework in this regard has only been gradually developed over the last years, there are valuable lessons learnt which can be leveraged in the implementation of a legislative environment to support the adoption of E Business in African States.
Reflecting research carried out under the Legal-IST project, which was funded under the European Commission IST Programme, this case study addresses four recently studied issues determined to be of high importance for eBusiness adoption in Europe. The objectives was to identify, address and study legal research areas to define research and development needs for short, medium and long-term focus (with regard to technology, methods, organizational and human issues, business relationship and working groups, national legal entities and codes) as well as to initiate and co-ordinate the analysis of specific issues of relevance for ICT- businesses and to provide recommendations on each research area studied, suitable for being used and adopted by policy-makers at EC level in order to evolve current legal framework. This research was based on questionnaire-based feedback received from legal experts, SMEs, policy makers and NGOs across Europe.
The four key legal issues for E Business in Europe identified are:
• Legal issues related to RFID
• Liability of information society service provider
• Self-regulation on B2B internet trading platforms
• Business registry.
1.1.1 RFID
Radio Frequency Identification (RFID) Technology uses radio waves to identify objects or people wearing RFID tags automatically and wirelessly. RFID has two parts: a tag containing an identification number and reader that triggers the tag to broadcast its identification number. RFID is of considerable interest in retail, consumer packaged goods and manufacturing supply chains in terms of potential efficiency.
Hospitals also plan to deploy RFID to identify patients, call up records, reduce medical errors and improve overall productivity. For instance, a pilot project has started in July 2005 in the clinical centre of Saarbrücken in cooperation with companies such as Intel, Siemens Business Services and Fujitsu-Siemens. The study also points out other fields of application including the use of RFID in passports (in November 2005 Germany introduced the first European e-passport, equipped with biometric data stored on a RFID tag) and banknotes, use in libraries and even in the tracking of people (like for example in prisons).
The key legal implications are related to RFID tags that directly store personal data such as name, age, nationality etc. The most prominent current legal issue is the one related with the protection of privacy and data protection. The study examines which European directives apply in relation to different categories
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of RFID tags, some of which only include product reference numbers, while others can provide access to personal data only in conjunction with a backend database. Issues related to obligations of the data controller are also considered.
1.1.2 Liability of Information Society Service Providers
The background to this issue goes back to the adoption of the EU E-Commerce Directive, and whether there should be stronger protection for the fundamental rights and freedoms of all internet users, or whether the directive should facilitate hunting down individual internet users who broke the law by for example, sharing files and breaching copyright in music. The original intention was facilitate the establishment of Internet Service Providers (ISPs) as a business model and not hamper its establishment through liability risks.
The study aims to provide a diagnosis of current liability problems as there is a general lack of regulation at the European Community level of a specific system of liability. The study points out four fields of interest: The question of the liability of providers of Hyperlinks and Location Tools (where there is a general lack of European case law); liability for the provision of Ad Words; claims for information; and problems concerning injunctions.
The main problems detected to date in relation to Hyperlinks and Location Tools are that linking may give rise to a range of unlawful acts such as libel, intrusion of privacy, IPR infringements, trademark infringements, misleading advertising, unfair competition and breach of contract. A large number of the complaints are brought for practical reasons: economic precariousness or lack of knowledge of the identity of the infringing party.
In light of applicable legislation and available case law, the potential problems concerning Ad words (where suppliers pay a premium for their goods or services to be highlighted if certain words are used in a search engine for example) are related to the legal definition of the concepts “keyword” and “metatag” and the legal nature of the “Ad words System”.
The potential problems in relation to issue of claims for information are the lack of harmonized legislation on the obligation for the ISP to retain traffic data and the lack of harmonized legislation related to claims for information.
With regard to injunctions the study considers problems related to intellectual property infringements, and specifically some specific responsibilities of the intermediary.
1.1.3 Self-Regulation on B2B Internet Trading Platforms
While across Europe there is E-Commerce related legislation at both a national and European Directive level, self-regulation is still an important facet of Internet regulation. The development of codes of conduct is actually encouraged by the Directive on Electronic Commerce (2000/31/EC - Article 16). Legal issues related to self-regulation are analyzed from the perspective of legal validity and enforcement, including different types of self-regulation such as codes of practice / codes of conduct, the use of trust marks and labeling, and best practice guidelines and their legal implications. There are
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valuable lessons to be learnt that can be considered for adoption in other jurisdictions outside Europe.
Because of rapid technical developments and the trans-national nature of Internet trading platforms, self-regulation was proposed as a solution to increase the willingness of businesses to join a B2B trading platform. Part of the focus of this study is to develop a template for such a voluntary code of conduct, identifying the main features of self-regulatory mechanisms and discussing the opportunity to address the identified barriers of entry on the B2B Internet trading platforms through self-regulation rather than state intervention. It also outlines future research required into how efficient a tool self-regulation can be for those considering joining a B2B trading platform.
1.1.4 Business Registry
An electronic business registry (E-Business registry) is a software system and infrastructure that enhances information channeling and interactions, required by eBusiness. It enables organizations to store information, select business partners and provide content for customers. However, information supplied by such a registry may raise issues related to data protection and liability issues, depending on the quality and standards of its service.
Using data warehousing techniques, allows analysis of data in a registry easy. However, depending on the methods used, information of varying quality can be produced. The study on business registry gives a clear overview over what business registries are as well as of legal issues regarding this sector. It ends with a summary of legislative recommendations.
Barriers to E-Business
The B2B Expert Group identified a series of factors that might explain the reluctance of businesses (and especially SMEs) to fully engage in electronic trade. These include:
o lack of awareness regarding the risks and benefits of joining a trading platform,
o difficulties in identifying the most suitable platforms for them to join,
o incompatibilities between technical standards,
o insufficient information about the rules applicable to the marketplace
Transactions,
o financial barriers (costs of implementing a secured transaction protocol and maintaining IT systems and websites).
The study recommends:
a. The formulation of Guidelines on the procedures to be followed in drafting a code of conduct and in the involvement of relevant stakeholders
b. Studying the true effectiveness of the codes of conduct in modifying the behavior of market players, or marketplace operators. Such a research should include concrete examples of market changes brought by the implementation of self-regulatory measures
c. Carrying out legal research on the enforceability of the provisions of codes of conduct by business partners or by third parties and available dispute resolution mechanisms.
d. Carrying out legal research regarding Trustmark, what rules govern their activity and the extent of their certification obligations
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Key Conclusions
For RFID, it is essential there is good coordination between technologists, regulators, legislators, and consumers to ensure that RFID can realize benefits to businesses and the wider society. Use of RFID requires serious consideration of data protection and data security implications, which in turn requires re-examination of the traditional legal principles and instruments.
For Liability of ISPs, it is essential to review the liability regime, taking into account the special role of ISPs in the Information Society. Greater legal certainty can be achieved by providing a legal definition of the appropriate court and out-of-court action and procedures.
Technical rules for business registries should be standardized in order to protect privacy of communication and to assure integrity and security of communications.
Self-regulation including use of codes of conduct is essential for B2B Trading Platforms. The creation of guidelines to help in the drafting of codes of conducts would be very beneficial. However, research into the enforceability of codes of conduct is recommended.
Questions:
1. Are similar legal issues currently being faced in your country or region?
2. What relevance do you believe such legal related issues have for your region or country?
3. What cultural, legislative or other barriers exist to successful adoption of e Business in your country?
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