Memorandum by the Law Society of Scotland
What needs to be done to create confidence and
to stimulate e-commerce?
1. The issues of security, encryption and electronic
fraud will no doubt be dealt with at length by other contributors
to this consultation exercise. We would wish to focus instead
on two of the more peripheral issues which have an effect on confidence
in e-commerce. The first of these matters is the approach of the
US Courts to Electronic Commerce disputes, the other is the issue
of parallel imports in an EU context.
US COURTS TO
2. In relation intellectual property matters
and their inter-relationship with e-commerce, a pattern is developing
in the USA whereby the US Courts exercise jurisdiction over foreign
companies with only the most tenuous connection with the USA.
An example is the recent decision in eToys Inc v etoy.
In this case an existing European company with an existing web
site was forced to take the site down because subsequently a large
American concern with a similar name put up its own site. It was
held that, as the American company had a registered trademark
in the USA which was older than either of the web sites, in order
to protect itself it was incumbent upon the European company to
register its trademark in the USA. In the absence of that registration,
the Court found in favour of the (later) American site. An approach
of this kind inevitably creates uncertainty as to position of
companies using e-commerce in their business and may lead to unwillingness
to participate in e-commerce in some areas. There is also a problem
with the unresolved position in the EU on the jurisdiction applying
to consumer contracts concluded using e-commerce. The negotiations
on the proposed Brussels Regulation relating to civil jurisdiction
are ongoing but until a final agreement is reached the uncertainty
in this area could impede increased growth in e-commerce.
3. One inevitable aspect of e-commerce is
the influx of goods from outside the EEA into the Member States,
often in the form of "grey market" unofficial imports
or "parallel" imports. The European Court of Justice
has not made a definitive statement as to whether a brand owner
can or can not use its trademark in the EEA to prevent parallel
imports. Apparently conflicting decisions such as Silhouette
International Schmied (C-355/96) (which favour the brand owner)
and Zino Davidoff (Judgment of the High Court of Justice
Chancery Division of 24 June 1999) (where the national court appears
to come down in favour of the parallel importer), only serve to
heighten the confusion. It is desirable that a balance between
the consumer interest and the interests of business be struck.
This is an area where decisive action could be taken to come to
some agreement on the position of goods imported into the EEA
in this way, other than through the necessarily piecemeal approach
of references to the European Court of Justice. Again, this is
an area where clarification of the law will help to create confidence
and stimulate e-commerce.
1 March 2000