Memorandum by the Licensing Executives
Society (Britain and Ireland)
The Licensing Executives Society is the world's
leading organisation for those in business and academia involved
in licensing intellectual property and technology, and advising
on the licensing process. Thee-commerce/Laws committees of LES
Great Britain and Ireland are delighted to be asked to comment
to the House of Lords Committee on this issue. Mr Dai Davis of
the LES, whose views it reflects, has kindly prepared this paper
for us. We believe that it reflects the views of a large number
(though not necessarily all) of our members.
1. What needs to be done to create confidence
and stimulate e-commerce?
Very little needs to be done to create confidence
as e-commerce is essentially gaining momentum of its own accord.
There is a public conception of a large risk being associated
with the use of credit card and debit card payments, but this
risk is, in reality, misfounded. What risk does exist primarily
lies with the banks rather than members of the public. In any
event use of encryption technology can reduce this risk to an
Any residual risk can be removed altogether
by changes in the law to protect consumers who use debit cards
in the same way as consumers who use credit cards are protected.
Although there are one or two minor areas of
law which could actually be used to stimulate e-commercethe
most obvious being that on electronic signaturesin reality
the only way to stimulate e-commerce is to remove, not create,
regulations. Internet business is international by its very nature.
Business moves to the countries of least risk. Within the Western
world, that means the countries with the least regulation. Inevitability,
this also means countries of least tax and least overheads. Internet
horse-race betting has moved offshore (primarily to Gibraltar)
because that country regulates the industry least. US Internet
sites which trade internationally (eg Amazon) do particularly
well because of the low cost of labour in the US and tax advantages
of being situate there.
2. Does the European Commission's draft Action
plan "eEurope: An Information Society for All" offer
a realistic means of promoting e-commerce in the EU?
Not really. The document is too bland to be
"realistic" to promote e-commerce in a meaningful way.
Nevertheless, because of its blandness, it is equally impossible
to say that it does not promote e-commerce. It clearly does. The
real issues are however simply not dealt with, or not dealt with
sufficiently vigorously. One ray of hope in the entire document
is in the third paragraph of section 3 where it states that "In
general terms, regulation of e-commerce should be limited because
of the speed of change and the implications of globalisation.
More emphasis must therefore be placed on the role of self-regulation
and `co-regulation' . . . and global co-operation must further
be developed." There are no substantive plans on how global
co-operation is to be further developed.
There is also a statement in section 3 that
all remaining e-commerce-related Directives should be in place
by the end of the year 2000. This would certainly be a means of
promoting e-commerce, if it were achieved and if, within a very
short period of time thereafter, those Directives had to be brought
into force by local legislation.
However, it is also important that the European
Union does not legislate too much. See my comments in particular
in the third paragraph of section 1 above and the second paragraph
of section 3 below. See also my comment about ambiguities in Directives
in section 4 below.
3. Will Codes of Conduct and Co-regulation
provide Sufficient Protection? Is there a Case for Intervention
by National governments and the EU?
This question is rather too broad to give an
answer to. There are certainly areas of commerce where codes of
conduct (as opposed to legislation) is perceived to work well
eg tobacco and alcohol advertising. There are other areas where
it is fair to say that codes of practice could be established
for better protection eg Internet banking and general protection
afforded to consumers who use debit cards. Since the European
Union is increasingly regarded as a single territory, (particularly
from outside the European Union) there is undoubtedly benefit
in having European-wide consumer legislation. Consumers who buy
from a European Union business will then know that they are adequately
protected. However, it is undoubtedly the case that all such consumer
protection legislation adds to the cost of doing business.
There is great plethora of consumer protection
which is not cost-effective in the sense that the cost to business
is not outweighed by the consumer benefit. This is certainly the
case with some consumer protection proffered by the European Union
eg the proposals by the European Union to allow consumers always
to sue in their "home" territory when they buy on the
Internet. This will, undoubtedly, severely disadvantage European
Union suppliers and will do little to protect consumers from within
the European Union buying on the Internet who can equally well
buy from abroad.
4. Do the institutions of national governments,
on the one hand, and the European Commission, the Council of Ministers
and the European Parliament, on the other, function with sufficient
flexibility and coherence to promote the EU's objectives in the
field of e-commerce?
Not really Important issues are invariably left
ambiguous in Directives and there is therefore little "coherence"
in the areas that really matter. Examples of this are the Distance
Selling Directive where the really important aspects of law are
left ambiguous. For instance, it is not clear under this Directive
whether Internet suppliers are permitted to comply with their
obligations under this directive (to provide information concerning
the contract to the consumer) by e-mail or not. This matter could
have been clarified in the Directive but it was not. It is therefore
left to the interpretation of each Member State as to whether
it permits such confirmation by e-mail or not.
5. Should existing EU Institutions' internal
structures be changed, or new ones created, to improve Policy
Development and Co-ordination?
No direct comment.
6. How can structural change be brought about
fast enough to accommodate to the growth of e-commerce?
It is difficult to see how the European Union
will ever be able to deal rapidly enough with e-commerce to make
a meaningful impact. The history of the European Union's attempts
to legislate technology areas has not been good. Directives particularly
take some five years (as a minimum) from discussion to local legislation.
Given that most people regard one normal year to be the equivalent
of three years on the Internet, this timescale is far too slow.
Necessarily, however, massive changes would need to be made to
the entire structure of the European Union to overcome this issue.
In the current political climate, it is difficult to see how this
will ever be achieved.
10 March 2000