Introduction they can be found liable- The extent

Topics: BusinessE-Commerce


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Last updated: September 21, 2019

Introduction to Electronic CommerceElectronic commerce or also known as e-commerce or internet commerce is the process of transacting or facilitating business on the internet.1  Intermediaries are key players in e-commerce but they have little to worry about responsibility for the activities of users of their services and shoulder some burden for the infringement of rights.2   There are three types of issues encountered with online intermediaries:3-       Identifying the legal ground on which they can be found liable-       The extent to which online intermediaries can rely on the Directive regarding their defences-       Remedies awarded against the online intermediaries and preventing future infringements Directive 2000/31/EC Articles 12,13 and 14 of the Electronic Commerce Directive deal with online intermediaries and establishes defences that benefit certain types of intermediaries.

 The Council of Ministers adopted Directive 2000/31/EC of The European Parliament and Council on the 8th of June 2000, which focuses on certain legal aspects of information society services, and particularly on electronic commerce.  The new European Directive seeks to contribute to the effective functioning of the internal market by guaranteeing the free movement of information society services between Member States. The scope of the Directive covers the approximation of certain provisions on information society services in relation to the internal market, the establishment of service providers, commercial relations, e-contracts, intermediaries’ liability, rules of conduct, and out-of-court settlement of litigation, and cooperation between Member States.The Directive does not create additional international private law norms nor does it deal with the jurisdiction of the courts. In order to achieve regulatory flexibility, the E-Commerce Directive provides for certain derogations, such as inapplicability in tax matters, issues relating to cartel law agreements and practices, notarial activities, representation before the court, etc.

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The Directive is a means of ensuring legal certainty and consumer protection by creating a clear and consistent legal framework. However, Article 15 States that the Member States cannot impose a general obligation on such intermediaries i.e. “to monitor the information which they transmit or store, nor a general obligation actively to seek fact or circumstances indicating illegal activity” available to such intermediaries involved in: mere conduit”, “caching” and/or “hosting”.4  Liability of intermediariesThe E-Commerce Directive aims at striking a fair balance and focuses on when an intermediary is not liable rather than defining underlying liability.5The Directive exempts intermediaries from liability for content they manage upon fulfilment of certain conditions:•          Upon realisation of the illegal nature of the hosted content – removal or disabling of access is immediately required•          Intermediaries must be neutral and merely technical towards the hosted content Information technology raises a number of issues relating to the parties’ responsibility in e-commerce relations and if most problems can be resolved on the basis of existing legal regulations, some require special rules to determine the limits of liability and the grounds for its occurrence. The Directive provides guidance on solving one of the most serious issues in e-commerce relationships – the responsibility of service providers that mediate the provision of information society.

Intermediaries are not responsible for the transmitted information through services consisting of the transmission of information provided by the recipient of the service or the provision of access to a communications network if the following conditions are met:•          The provider did not initiate the transmission•          The provider does not select the recipient of the transmission•          The provider does not select or modify the transmitted informationIn relation to the temporary storage and transmission of information provided by a recipient of the service, intermediaries are not responsible for the automatic, intermediate and temporary storage of this information. It should only be done in order to facilitate the subsequent transmission to other recipients of the service at their request. On the other hand, further requirements must be met in order to avoid liability for service providers.

 The problem of liability lies within the content which is authorised by third parties. Cases mainly originated in the US and were focused on liability of the big Internet Service providers, namely: AOL and CompuServe.6One of the earliest cases on the matter was Cubby v CompuServe.

The lack of harmonisation led to seeking immediate measures and emerging case-law to form special regimes.   Online AuctionsThe Internet has made available to a large number of buys and seller the “online auctions”. When one thinks of an auction, the first thing to pop into our minds is eBay and how more and more buyers and sellers nowadays find online auctioning more appealing than regular storefront shopping.7 The landmark judgement L’Oréal v eBay8 dealt with trademarks and was brought by L’Oréal against eBay for actions of distributions of unauthorised sampler products.

The question was whether eBay could be found liable for trade mark infringement. The High Court in fact found that there had been a trade mark infringement committed, but ruled that eBay was not jointly liable for infringement. Thus, another question arose: Whether eBay had defence under article 149 of the Electronic Commerce Directive. ‘If it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question was unlawful’. Thus, if an intermediary plays an active role for the presentation of the infringing product, it might be held liable. However, knowledge of the unlawfulness of the goods might also make the intermediary liable.

This case set a very important test for intermediary liability and built up boundaries for content that could be posted by users.10 Conclusion Following the landmark judgment of L’Oreal v eBay measures of harmonisation have been achieved. Harmonisation of the defences available to intermediaries insuring that injunctions can be granted without showing fault on their part.

1 ‘Learn About The Basics Of Ecommerce And How It Works’ (The Balance, 2017) accessed 16 December 2017.2 Toby Headdon, Beyond Liability: On The Availability And Scope Of Injunctions Against Online Intermediaries After L’oreal V Ebay (European Intellectual Property Review 2012).

3 Trevor Cook, ‘Online Intermediary Liability in The European Union’ (2012) 17 Journal of Intellectual Property Rights. 157-1594 Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM) 2011 C-70/10.5 Toby Headdon, Beyond Liability: On The Availability And Scope Of Injunctions Against Online Intermediaries After L’oreal V Ebay (European Intellectual Property Review 2012).6 Lilian Edwards and Charlotte Waelde, Law And The Internet (3rd edn, Hart Publishing 2009). 7 ‘Learn About The Basics Of Ecommerce And How It Works’ (The Balance, 2017) accessed 16 December 2017.8 L’Oréal SA and Others v eBay International AG and Others 2011 High Court of Justice (England & Wales), C-324/09 (High Court of Justice (England & Wales).

9 Relating to hosting: “1. Where an information society service is provided that consists of the storage of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the information stored at the request of a recipient of the service, on condition that: (a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or (b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.”10 Andres Guadamuz, Developments In Intermediary Liability. Savin & J Trzaskowski (Eds.), Research Handbook On EU Internet Law (2014). 312-320 

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