Publications
European IP Bulletin, Issue 3, July -
Hot Topics
Hot Topics
1. The Directive on Privacy and Electronic Communications (2002/58/EC)
Introduction
Businesses using email or text messaging systems to market to clients need to be aware that from this October a new Directive should be implemented across the European Union with the aim of harmonising throughout the Member States the legal requirement of privacy protection in relation to the processing of personal data in electronic communications. The Directive covers a wide range of topics from subscriber directory data to location data and security.
Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (the Privacy Directive) was adopted in July 2002 and must be implemented by 31 October 2003. The Privacy Directive updates the Telecoms Data Protection Directive (Directive 97/66/EC) (the TDPD) to reflect new technologies and ensure that the relevant rules apply to phone and fax services, e-mail and internet usage. The Privacy Directive aims to ensure that all EU Member States apply equivalent levels of privacy protection regarding the processing of personal data in the electronic communications sector while ensuring that the free movement of data or equipment, or the provision of services in the EU is not obstructed.
Aim and Application
The Privacy Directive applies to the processing of personal data in connection with the provision of publicly available electronic communications services in public communications networks within Community. It includes provisions regarding calling and connected line identification (CLI) and call forwarding, which apply to both analogue and digital systems, except where this is technically impossible or would require disproportionate economic effort. It also applies to electronic communications and e-mail and internet usage as well as phone networks. Point to multipoint broadcasting is not covered, but point to point services e.g. video on demand, value added services and e-mail and SMS are.
Security
Network and service providers are obliged to collaborate to safeguard network security. Service providers must inform subscribers of particular security risks which, if these cannot be reasonably excluded, must include information regarding other possible remedies and their likely costs. Information concerning security risks should be free except for nominal costs incurred by subscribers while receiving or collecting information.
Confidentiality
Member States are obliged to ensure the confidentiality of communications and related traffic data. Interception and surveillance of communications is generally prohibited unless authorised for national security, law enforcement and related purposes, or to record evidence of commercial transactions or other business transactions where necessary and authorised under national law. Parties to communications which are monitored for business purposes must be provided with certain information.
Cookies
When electronic communications networks are used to store information or gain access to information stored in the terminal equipment of subscribers or users clear and comprehensive information must be provided in accordance with Data Protection Directive 95/46/EC (the "Data Protection Directive") concerning the purposes of such storage. The subscriber or user must be allowed to refuse such processing. This does not apply to technical storage or access if strictly necessary to provide information society services requested by subscribers or users. These provisions apply to use of "cookies" and similar software. However, cookie free access does not have to be provided where the cookie is essential for an on-line service which has been requested or is being used for a legitimate purpose on a web-site.
Traffic Data
Electronic communications network and services providers must delete or anonymise traffic data once it is no longer required for network management, billing or dispute resolution.
Value Added Services
Providers may retain and use traffic data to market communications services and provide value added services (which can involve anything) and third parties may be involved in their provision. Subscribers and users must be informed of the data processing implications of any services, consent to the relevant service or marketing and be allowed to withdraw such consent at any time.
Itemised Bills
Subscribers are permitted to receive non-itemised bills. Member States are also obliged to ensure that privacy enhancing methods of communications or payments are available to users and subscribers. Other billing options must also be provided for.
CLI Services
Service providers are obliged to provide certain calling and connected line identification (CLI) services. Service providers are obliged to offer various CLI services to subscribers including the right to withhold CLI on outgoing calls on a per call or per line basis and the right to block incoming calls where the CLI has been withheld. Anonymous callers should receive automatic message explaining why the call is barred and how to enable the call. Some CLI services must be provided free including the suppression of CLI on outgoing calls. Network and Service Providers may override subscribers and user's CLI or location data preferences to trace malicious or nuisance calls, or assist the emergency services.
Location Data
Network and service providers may also introduce value added services based on location data, e.g. location based advertising to mobile phones, or traffic or weather alert services. Any services can be provided and third parties can be involved in their provision. The relevant data must be anonymised or the individual concerned must consent. Prior to consent subscribers and users must be informed of the service's data processing implications and must be allowed to withdraw their consent at any time and temporarily withhold consent for free.
Call Forwarding
Subscribers must be able, freely and simply, to block third parties automatically forwarding calls.
Subscriber Directories
Subscribers must be told about the kinds of subscriber directories they may be listed in and how they will be used, including any non-standard search functions available in electronic versions. The party collecting data for inclusion in such directories (in the UK usually the network or service provider) must inform the subscribers. Subscribers must be permitted to decide whether to be listed and what personal data should be included (the information must be relevant for the directory's purposes, as decided by the directory provider). Omission from a directory or correcting or changing an entry must be provided free. Member States may impose separate consent requirements for inclusion in any directory including "reverse search" functions allowing directory users to search for subscribers' names and/or addresses based on phone numbers, rather than vice versa. Subscribers must be told if any directories they are entered in can be so used. These rights apply to subscribers who are natural persons and may be extended to legal persons. The new rules will not apply to existing editions of directories. The Privacy Directive applies to publicly available directories of subscribers of electronic communications services.
Unsolicited Commercial Communications - Automated Calling Systems, Fax, Phone, E-Mail and SMS
The Privacy Directive maintains existing controls on unsolicited direct marketing by means of automated calling systems without human intervention, fax and phone and introduces new controls on unsolicited e-mail and SMS marketing. Individual subscribers must have prior consent or opt in rights in respect of automatic calling systems, faxes, e-mails and SMS. However, there is an opt in exemption allowing e-mails to be sent on an opt-out basis in the context of existing customer relationships where the sender obtains the addressee's contact details in the context of sale of products or services and in accordance with the data processing rules in the Data Protection Directive, is marketing its own similar products or services and the addressee is always able to opt out of future marketing easily and free of charge. E-mailers must not conceal their identities. These rights apply to natural persons and may be extended to legal persons. The Privacy Directive treats unsolicited SMS for advertising in the same way as e-mail messages.
Enforcement and Sanctions, Technical Standards and Exemptions For National Security and Law Enforcement Purposes
The Privacy Directive also includes a number of provisions in respect of enforcement and sanctions, technical standards and exemptions for national security and law enforcement purposes. Certain provisions of the Data Protection Directive, RIPA and the Anti-Terrorism, Crime and Security Act 2001 are also relevant.
Conclusion
The Privacy Directive is likely to have far reaching implications for any person or entity who is involved in the provision or receipt of an electronic communications service and processes personal data in the context of it. In the UK the practical implications of the Privacy Directive should become clearer in August once the DTI publishes its consultation paper in relation to the implementation of the Privacy Directive and the draft implementing regulations. Until then be aware that changes to the current legal positions across the EU are imminent and that failure to comply with the Privacy Directive, and its related legislation, can have serious implications and, in some cases, criminal liability.
2. German Ministry of Justice Proposes Bill Reforming Act on Unfair Competition
The German Ministry of Justice has presented a bill to modernise the current Act on Unfair Competition (Gesetz gegen unlauteren Wettbewerb). Currently in Germany it is not permissible for retail outlets to reduce prices of stock unless there is a season sale or there is a special event (Sonderveranstaltungen). The proposed bill would withdraw these restrictions. It would further specify the "blanket cause" (prohibiting any acting against morality for the purpose of competition) - which is central to unfair competition law – by consolidating existing case law and principles developed by legal practice over decades. , Worth mentioning, among other things, is the newly created prohibition against spamming in section 4 lit. 3 of the bill.
In July 2001 the German legislator began its legal initiative to liberalise the economy by abolishing the Act on Discounts (Rabattgesetz) and the Regulation Governing Gifts (Zugabeverordnung). Both laws have prevented for the past 60 years the excessive use of price discounts and free goods and services offered in addition to the contract goods.
At present, despite the abrogation of those laws, it is still not possible to award limitless discounts on goods and services. Section 7 UWG (Gesetz gegen den unlauteren Wettbewerb) prohibits sales promotions on the retailers’ entire goods in stock if they do not fall within the statutorily defined periods during which seasonal sales are permitted, unless the promotion is connected to a business jubilee (such as a celebration of the anniversary of the founding of a business). However, discounts of single items are permitted in the normal course of business.
This out-dated rule was publicly discussed when the clothing chain C & A had to pay a € 400,000 penalty relating to a 20% discount on its whole stock in respect of card payments following the currency changeover in January 2002. The Düesseldorf Lower Regional Court held this promotion to be illegal despite the company’s argument that this was a unique historical situation. In the aftermath, shop owners were concerned as the above mentioned repealed discounts were regarded as permitted. Bearing in mind the critical response to this case, the proposed bill rejects these restraints and instead follows the European approach, which treats the consumer as someone who is mature and able to decide by himself the quality of the deals and discounts offered. The proposal permits discounts of the whole stock regardless of timing and whether or not it is in the normal course of business. It also permits advertisements using the term "sales". To advance the transparency of prices section 5 para. 4 of the bill prohibits advertisements with so called "lunatic prices", meaning unrealistic price reductions or loss leaders. In the same way, advertisements with special discounts are prohibited if a sufficient supply of the advertised goods is not assured.
A further change will implement the introduction of the newly created claim of absorption of profit in section 9 of the bill. This legislation targets the economic stimulus for unfair trade practices. As to keep the principle of proportionality this claim can only be activated in the case of intended or grossly negligent unfair behaviour of a competitor. Those entitled to benefit under this claim are consumer protection associations and chambers of commerce. To prevent the abuse of this instrument, any profit made under a claim has to be released to the federal government.
The proposed bill makes the Act on Unfair Competition more transparent and liberal. It promotes the liberalisation of trade, abolishing needless restrictions that harm consumers more than they benefit them. The German legislator attempts in this way to dispel the overriding opinion worldwide that the German Act on Unfair Competition is a stumbling block to its economy. The bill is further intended to encourage the European Union to plan on harmonization in this area. The proposal is currently being discussed and it is expected to be brought to the Lower House of the German Parliament in due course. It is anticipated that it will come into force on 1 of January 2004.
3. Third World Intellectual Property Day
Following a call of the Director General of the World Intellectual Property Organisation for society to be more involved in matters relating to intellectual property, the theme of this year’s World Intellectual Property Day held, as previously, on 26 April 2003 was: "Making Intellectual Property Your Business".
In 2000, member states of the World Intellectual Property Organisation (WIPO) designated 26 April, the date on which the Convention establishing WIPO entered into force in 1970, to celebrate the contribution made by innovators and artists to the development and growth of societies across the globe and to highlight the importance and practical use of intellectual property.
While the themes of the first two World Intellectual Property Days were "Creating the Future Today" and "Encouraging Creativity", the theme of this year’s World Intellectual Property Day was "Making Intellectual Property Your Business".
This theme highlights the key role of intellectual property both in achieving business success and in enhancing our daily lives. It is an appeal for entrepreneurs to fully capitalise on the intellectual property assets by using the tools of the intellectual property system to advance their business goals and a wider call for civil society to recognise that respect for intellectual property rights is of benefit not only to creators but to society as a whole.
Indeed, as Dr. Kamil Idris, the Director General of WIPO pointed out in a message released on that occasion, "A company’s intangible assets – ranging from human capital and know-how to inventions, brands, designs and other products of its creativity and innovation – are, today, often more valuable than a company’s physical assets". "Making intellectual property your business is also a wider call for civil society to recognise that respect for intellectual property rights is of benefit not only to creators but to society as a whole. The intellectual property system enables innovators and creators to mint marketable inventions and works from the raw material of their artistry and ingenuity. This makes the intellectual property system a driver of technological development and ensures a force for the enrichment of our global cultural heritage, and a powerful tool for wealth creation for the benefit of all".
WIPO Member States were also invited to participate to World Intellectual Property Day by organising events and activities. In the United Kingdom, an Electronic Database of Intellectual Property (EDIP) was launched in Oxford University on 25 April, as part of World Intellectual Property Day celebrations. Other events around the world included talks and seminars, workshops, exhibitions, special broadcasts on radio and television, all on the theme of intellectual property.
4. Royal Society report on the effect of intellectual property rights on research
A report recently published by the Royal Society examines the effect of intellectual property rights on research.
The report "Keeping science open: the effects of intellectual property policy on the conduct of science" studied the effect of several intellectual property rights, i.e. patent, copyright, and database legislation. The study highlights a negative effect of those rights on the publicly funded research and also their consequences for society. "The current intellectual property system needs to be tightened for the sake of both science and society," said Prof. John Enderby, Vice-President of the Royal Society.
The report highlights that in public research, a focus on intellectual property rights can diminish the high quality of the research by inducing other goals and that the net income derived from intellectual property in public research is low compared to other sources of revenue such as direct investment.
The report states that the current patent system encourages a ‘gold rush mentality’, which affects the free flow of scientific information. While patents do not appear to delay publication, they appear to encourage a climate of secrecy. Also a focus on gaining patent encourages short-term research with more direct results to the detriment of long-term purely scientific programmes. Patents with broad scope in early stages of development within a field can significantly diminish research in that field. The development of digital storage and delivery technology has diminished the cost of sharing data but has inhibited the free access in conjunction with new Database Right legislation. The Royal Society’s view is that the development of information technology, alongside developing intellectual property laws has unreasonably and unnecessarily restricted access to and use of information.
The report provides several key recommendations to assess and improve the role of intellectual property rights in research. It suggests a more efficient patent examination system scientists ensuring that their data and databases are readily available to others. Finally a further study assessing the extent to which intellectual property is driving research in publicly funded research is recommended.
5. How can the public sector provide people with information on, and build confidence in, the way it handles their personal details?
The Lord Chancellor's Department has published a consultation paper upon personal information and the way the public sector is handling it. The purpose of this consultation is then to assess: "(i) whether the document proposed is sufficiently clear about what people can expect from the public sector; and (ii) what else the public sector might do to address public concerns and improve confidence". The consultation ends on 27 June 2003.
This consultation follows a previous report entitled "Privacy and Data-Sharing: the Way Forward for Public Services" that was compiled by the Performance and Innovation Unit of the Cabinet Office in April 2002. It included proposals about the better use of personal information collected by the public service, but also it stressed the need to gain the public trust in relation to that information. The public is concerned about the way personal information is used, especially with the development of information technology and the internet, the ‘fear of erosion of privacy by a big brother government’, and the efficiency of public bodies in safeguarding the information. It also appears that the public seems unaware of the regulations and current legal safeguards built to ensure proper handling of such information. The Lord Chancellor’s Department previously produced a document, intended to address those requirements.
The consultation paper is based on a document that is an improved version of the previous one. It is intended to fulfil public expectation concerning such questions. It intends to provide sufficient information to be relevant, while being accessible to the public as well. The document is divided in three parts entitled: "When we will ask you for information we will…", "In return we ask you to…", and "at any time you can ask us for further details on…"; which deal respectively with: (i) the duty of the public sector to explain their actions, and its duty concerning the protection of such information; (ii) the importance of the accuracy of such information; and (iii) the possible further use that could be made of such information and third party accessibility.
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