Legal Aspects of the Information Society

June 30, 2001

For anyone embarking on a search to identify the legal challenges posed by the Information Society, Ian Lloyd’s book on Legal Aspects of the Information Society provides the perfect point of departure. Concise and yet informative, the author’s stated aim to provide both non-specialists and business people alike with an overview of the basic legal issues involved in the world of IT may be said to have been achieved. Even lawyers seeking a practical overview of the workings of the Internet from a legal perspective may find this to be a useful handbook. Yet this category of professionals wishing to conduct an in-depth legal study of this field of law would perhaps find another book by the same author, Information Technology Law (currently in its third edition), more suited to their needs. This latter book (Butterworths (2000)) assumes a good legal background on the part of the readers and consequently devotes itself to much greater detail on the intricacies of the IT law issues involved.

Legal Aspects of the Information Society starts off with an overview of some basic legal concepts, essentially from a common-law perspective. The author thus seeks to familiarise his non-legal readers with the nature and sources of the law as well as the main features of those areas of law that are particularly relevant to the Information Society. The statute law process in the UK, characterised by the notion of Parliamentary supremacy, is outlined, and a distinction drawn with secondary legislation. Judge-made law is then explained, with an introduction as to the court structure and an emphasis on the notion of legal precedent, as is EU legislation and its effect on national legislation generally.

This chapter does not however give a mere synthesis of general principles of law in vacuum. Such principles are illustrated with references taken from the IT world. Thus for instance when discussing criminal law, the problem posed by the versatility of information, which is increasingly becoming an ever more valuable commodity, is highlighted. The discussion of contractual and non-contractual liability also follows this technique, considering the applicability to the online world of principles such as implied terms of contract, product liability, vicarious liability and the notion of the reasonable man. This approach serves to highlight the interrelated nature of legal and IT concepts and put the reader into the right frame of mind from the very outset. Doing otherwise would have defeated the whole purpose of the book.

The following chapter shifts its emphasis onto the technicalities of the Internet, beginning with a short history of cyberspace and explaining technical concepts, including the TCP/IP protocols and the advent of the WWW, crucial to any understanding of the virtual society. The domain name system and its administration is further discussed in some detail, outlining the proposals for reform that have been made in this regard.

Having laid the ground for the rest of the book both on the legal and on the technical side, Lloyd delves into the first key aspect of the information society, the notion of privacy and data protection. How is a person’s basic right to privacy being threatened on the Internet? What problems are being posed in this regard by automation and the processing of personal data? What are the rights of the data subject where the data involved is of a personal nature? And how significant are transatlantic differences in approach with regard to transborder data flow?

Computer crime is no less important in the Information Society. Hacking has today become synonymous with the act of obtaining unauthorised access to a computer system by means of a telecommunications connection from another computer, with the promulgation of computer viruses, defined as malicious software that replicates itself, seen to be inextricably linked to it. Chapter 4 considers computer misuse legislation, the legal response to these problems, as well as to computer fraud generally. In the UK the relevant piece of legislation is the Computer Misuse Act 1990. It is seen however that the applicability in practice of the requirements laid down by the Act, namely that the access must be attempted or obtained and also unauthorised and that the person charged must know that this is so, has proved to be rather complex.

Liability is another hot issue and presents itself in a number of different forms. Criminal liability for content is dealt with first, with a focus on the problems of conflict of laws due to the borderless nature of the Internet on the one hand and of defining or categorising the Internet on the other. Concern is growing as regards the extent to which the Internet may be used for the dissemination of material, especially material of a pornographic nature. Realising the limits of legal control, a number of self-regulatory measures have been resorted to. One of the main UK initiatives considered is that of the UKERNA agency, which maintains a list of newsgroups that may not be accessed over its facilities.

Defamatory content raises further issues of liability discussed in Chapter 10. There is no doubt that a person posting defamatory material on the Internet will incur liability. The notion of vicarious liability may however also arise, as in cases where an employer is liable for the misuse of his company’s communications network by his employees. A controversial issue considered is the extent to which the operators of an online service should incur liabilities akin to those of traditional publishers in respect of messages appearing on their systems.

Liability for defective products is nothing new. Yet there are two main differences between tangible products and computer software that give liability in the case of the latter category a new dimension. First, unlike tangible products, although testing can be made it is impossible to test even the simplest program in a fully exhaustive fashion. Besides, it has to be accepted that every piece of software will contain errors that may manifest themselves only when a particular set of circumstances occurs. In the case of tangible products on the other hand most instances of defects occur as a result of errors at the production stage. Chapter 10 discusses liability that may arise either in contract or in tort.

Another realm of law challenged by the information society is that of intellectual property – copyright, patents and trademarks. To what extent can traditional intellectual property laws apply to activities relating to software? Chapter 7 considers the extent to which activities relating to software might fall foul of traditional copyright law; the following chapter does the same with regard to patents. The technique adopted by the author seeks to promote clarity of thought in the reader’s mind, with a presentation of the traditional principles of both copyright and patent law expounded first, followed by a discussion of the specific problems posed by the Internet. Rights in databases, as evolved before and after the adoption of the EU Directive and regulations, form the subject matter of Chapter 9.

Finally, what value would a book on the Information Society have without a discussion on electronic commerce? Concision being the hallmark of this book, a detailed account of the plethora of issues raised in this field is not to be expected. Yet the author does succeed in outlining the basic issues involved in the commercialisation of cyberspace. Distance selling, mainly in the form of mail order and catalogue selling, has been a feature of commercial life for many years and it may therefore be tempting to suggest that commercial transactions via the Internet are not that different and consequently raise no novel legal issues. This may be true to some extent, yet e-commerce does challenge the continued validity of certain legal assumptions and, although this does not of itself require that legal principles be overturned, some clarifications and adaptations of the law do need to be made.

The concluding four chapters of the book are thus dedicated to three aspects of e-commerce. First, electronic contract formation: How is the requirement of a writing laid down in conventional contract law to be satisfied in the virtual world? What is meant by electronic signatures and encryption? Is an offer made by a service provider an offer in itself or merely an invitation to treat, and what are the consequences of either? When is a contract deemed to be concluded online? Business-to-consumer transactions for their part do not only give rise to general consumer protection issues, but also to specific issues, including the problem of spamming and Alternative Dispute Resolution.

Traditional principles on which a country’s taxation rights have traditionally been based are also being challenged. The document published by the UK Inland Revenue and HM Customs and Excise in November 1999 identified three areas so challenged: tax administration, compliance and tax evasion issues and taxation rules per se. The OECD has expounded a number of guiding principles for Internet taxation – the principles of tax neutrality, efficiency, certainty, simplicity, effectiveness, fairness and flexibility. Proposals for alternative methods of taxation, such as the proposal for the introduction of a ‘bit tax’ have thus been laid aside. Yet if the existing taxation rules are to be applied to the Internet should they be adapted to suit this new virtual reality? In his final chapter, Lloyd outlines the legal issues involved in direct and indirect or consumption taxes, considering international initiatives in this field.

The format of this book is very user-friendly, with numbered paragraphs for easy reference. Footnote references are unfortunately lacking (except in those instances where the author refers to cases by quoting the reference in the main text) and would not be amiss in a future update. n

Brigitte Zammitt is a legal assistant with Pricewaterhouse Coopers in Malta and is currently researching for her LLD dealing with some legal aspects of e-commerce.