EU Data Protection: “Binding Corporate Rules” as an Alternative to the “Safe Harbor” for Multinationals that Transfer Data to the U.S.

Global corporations with offices or customers in the European Union should be aware of the latest European Union proposal for compliance with its Data Protection Directive 95/46/EC with respect to internal transfers of information among members of the same corporate group. Interested parties will be submitting comments through September 30, 2003.

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California Supreme Court Resolves Apparent Conflict Between Trade Secret Law And Free Speech Rights

In a recent case of first impression, the California Supreme Court unanimously held a trial court’s preliminary injunction preventing publication of a computer program for descrambling digital video disks did not violate the defendant’s free speech rights, assuming the trial court properly issued the injunction under California’s trade secret law. In its August 25, 2003 decision in DVD Copy Control Assoc., Inc. v. Andrew Bunner, the Court resolved an apparent conflict between the free speech clauses of the United States and California Constitutions and California’s trade secret laws. This decision is significant because it is one of the first in the country to deal with the interplay between the free speech rights of parties who wish to publish technical information on the Internet and the property rights of parties who claim trade secret ownership in such information.

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FCC Stays Broad Expansion of Rules on Unsolicited Faxes

The FCC has issued a lengthy stay of an important aspect of its new restrictions on unsolicited faxes. On June 26, 2003, responding to complaints of “besieged” consumers, the FCC took action that greatly enhanced the existing statutory prohibition against unsolicited facsimiles contained in the Telephone Consumer Protection Act of 1991. In its Report and Order, the FCC reversed an important prior interpretation by eliminating a key exception for sending faxes to existing customers; instead, the FCC concluded that affirmative, opt-in consent to receive faxes would be required, even for existing customers. The new rule is merely one component of the rules regarding the TCPA, but it merits significant attention because of its impact on all businesses and associations that communicate with customers via facsimile.

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EU Regulation of Jurisdiction and Cross-Border Liability

The global nature of the Internet means that any business trading online is opening itself up to the possibility of trading with other businesses or customers based abroad. This is one of the enormous attractions of the Internet. However, the introduction of a foreign element to a business’s activities exposes it to issues of conflict of laws. Regardless of the business’s choice of law governing its activities and choice of court for handling any disputes, it may find that the laws of other countries apply or that the courts of other countries claim jurisdiction. So, it is important that any business engaged in e-commerce considers the implications of a global marketplace on its activities. This briefing note examines which courts have jurisdiction over a contract resulting from e-commerce and which law will be applied.

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EU Regulation of E-Commerce under the E-Commerce Directive

The EU Commission has stated it believes that between 2001 and 2003, the number of people engaged in business online will have trebled and the number of transactions to buy and sell goods and/or services over the Internet will have multiplied by twenty. The UK’s Department of Trade and Industry estimates that the e-commerce industry is worth in excess of £57 billion in the UK alone. One of the difficulties experienced by businesses that wish to conduct e-commerce is the increasing need to know not just about the legal requirements of their own jurisdiction, but also the legal requirements of those jurisdictions where their customers are located. Whilst for consumers one of the biggest hurdles is the continued lack of trust and confidence in the Internet as a means of purchasing goods and services. 

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EU Regulation of Distance Selling

In order to encourage consumer confidence in buying goods and services over the Internet the EU has adopted Directive EC 97/7 on the protection of consumers in respect to distance contracts (the “Distance Selling Directive”). In the UK, the Distance Selling Directive has been implemented by The Consumer Protection (Distance Selling) Regulations 2000 (“the Regulations”). The Distance Selling Directive provides an agreed minimum level of consumer protection throughout the EU, requiring businesses to provide certain information to consumers before and after ordering goods and services at a distance such as over the Internet or by phone providing consumers with rights of withdrawal and regulating certain marketing methods. 

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EU Regulation of Distance Marketing of Financial Services

The Directive regarding the distance marketing of consumer financial services is an essential part of the Commission’s strategy to develop an internal market for retail financial services. The strategy, as set out in the Commission’s Communication on E-Commerce and Financial Services, is part of the Financial Services Action Plan. This sets out the Commission’s wider goal of creating a fully integrated European market in financial services by 2005 to complement the introduction of the euro. The aim of the Directive is to harmonise Member States’ rules on the distance marketing of consumer financial services, thereby raising the level of consumer protection whilst enabling service providers to market their services across the EU without unnecessary obstacles.

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