IBLS Speaker's Corner : advertising and marketing

How Are You Handling Personal Information?

Maricelle Ruiz — Sun, 15 Jul 2007 15:43:00 GMT

Banks, retailers, recruiters and other organizations must adopt adequate measures to protect employee and client data immediately or else risk prosecution. In fact, the United Kingdom’s Information Commissioner recently announced it had found 12 firms, including Barclays and NatWest, in breach of the Data Protection Act and had ordered them to sign formal undertakings. Leading telecom company Orange has also been found in breach of this regulation, according to Commissioner Richard Thomas.

“How can laptops holding details of customer accounts be used away from the office without strong encryption?” Commissioner Thomas asked during the recent launch of his agency’s latest annual report. “How can millions of store cards fall into the wrong hands? How can online recruitment allow applicants to see each others’ forms? How can any bank chief executive face customers and shareholders and admit that loan rejections, health insurance applications, credit cards and bank statements can be found, unsecured in non-confidential waste bags?”

The Information Commissioner’s Office (ICO) enforces the UK’s Data Protection Act 1998, the Freedom of Information Act 2000, the Privacy and Electronic Communications Regulations 2003, and the Environmental Information Regulations 2004. The Data Protection Act requires organizations to manage personal information responsibly, while the Privacy and Electronic Communications Regulations support the aforementioned Act by regulating the use of electronic communications for unsolicited marketing to individuals and organizations. The Freedom of Information Act, meanwhile, gives people the right to access information held by public authorities; and the Environmental Information Regulations provide access to environmental information held by public and private bodies.

“The collection of biometrics and other personal information as a weapon in the fight against terrorism and serious crime, the increased sharing of our personal information to improve public services, and ever more inventive forms of electronic marketing, are all examples of ways in which this private space is under challenge,” the ICO reports states. “Legitimate aims are, for the most part, being pursued but protecting the privacy of our personal information in a measured and responsible way has never been of more importance. The existence of a law is not, on its own, enough to achieve this. The law must be applied in practice.”

ICO emphasizes the need to follow the principles established in the Data Protection Act. Personal information must be: fairly and lawfully processed for limited purposes; adequate, relevant and not excessive; accurate and up to date; kept no longer than necessary; processed in line with individual rights; secured; and transferred to other countries with adequate protection. Actually, ICO has been involved in the investigation of the Society for Worldwide Interbank Telecommunication (SWIFT) issue.

According to the ICO report, in June 2006, the agency along with several data protection authorities in the EU and worldwide received a complaint about “alleged covert disclosure” of information on EU nationals, specifically UK citizens, to the United States by the international financial messaging service. After determining at the EU level that the information had been transferred “in a manner contrary to fundamental data protection principles,” ICO has asked UK financial institutions to consider measures needed to comply with data protection standards. ICO also advises companies on privacy enhancing technologies; radio frequency identification tags; and marketers in particular about the Privacy and Electronic Communications (EC Directive) Regulations 2003, among other technical and legal advice.

A spokesman for the UK’s John Lewis told the BBC the department stores don’t collect data in ways in which specific customers are readily identified. “It’s more about trends and protecting their interests – if there was a fraudulent transaction, picking it up because we have an insight into their sort of habits,” the spokesman explained. The BBC also provided government advice on how individuals may protect themselves from identity theft, reportedly costing the UK government £1.7 billion a year and each victim 300 hours to solve. Among the tips are the following:

• Rip or shred all documents containing personal information.
• Keep personal documents in a safe, in the bank or at your lawyer’s office.
• Do not provide financial information via email or telephone.
• Equip your computer with anti-virus, anti-spyware and anti-spam programs.
• Don’t write down or save passwords; and stay away from obvious passwords.
• Check financial statements and credit records regularly to detect irregularities.
• Redirect mail to new addresses.

Victims should contact the police and their banks right away and keep track of all documents and hours spent solving this crime. Meanwhile, when signing an undertaking, a person generally doesn’t have to admit the acts accused of. However, if the promise not to engage in these acts in the future is broken, the signatory will be in contempt of court and may be imprisoned.

Long Player: Five-Year Dispute Ends Successfully For BPI against CD Wow!

IBLS Editor — Tue, 19 Jun 2007 16:31:00 GMT

IBLS Contributor: Chris Scroggs, Wards Solicitors, United Kingdom, chris.scroggs@wards.uk.com, writes:

Last month saw the conclusion (or did it…?) of a long running battle between the BPI, on behalf of record companies, and CD Wow!, effectively fighting on behalf of consumers everywhere.

The story behind the dispute

The case had its genesis in 2002, when the BPI issued proceedings against CD Wow!, alleging that it had illegally imported discs into the UK, from Asia. That case was settled in January 2004, when CD Wow! gave undertakings to the court.

The allegation was that CD Wow! was buying discs in the Far East and selling them to consumers in the UK. CD Wow! accepted that it was selling cut-price CDs but claimed that they were all licensed to sell in the UK and that there was nothing improper, let alone illegal, about what they were doing. Not so, said the BPI, who felt it was a clear case of “parallel importing”.

Parallel importing is what happens when copyright material that is intended for a market outside the EEA (European Economic Area) is introduced for sale in Europe without the consent of the copyright owner. Such a practice contravenes UK and also European copyright law and is therefore illegal.

There was then a further flurry of proceedings in September 2005, when it became apparent to the BPI that the illegal importation of CDs – in particular the Live Aid DVD – by CD Wow! was still happening. In that particular case, the charity had been deprived of income.

The BPI spent some time gathering further information and then brought contempt of court proceedings against both CD Wow! and its principal share holder, Philip Robinson, in October 2006.

That case was due to come to court in July 2007 but in fact the court short-circuited that process and dealt with the case in mid May. That followed a four day hearing in March when the High Court ruled that CD Wow! was in breach of the 2004 agreement and CD Wow! was ordered to pay £37 million damages plus costs and interest, altogether totalling £41 million.

In the hearing, CD Wow! admitted to breaches of copyright law but put them down to human error in its despatch process. The court would have none of it and that evidence was unhesitatingly rejected.

The court said there was clear evidence that CD Wow! was committing widespread breaches of the undertakings that it gave in 2004. In fact, not only was it in breach, but even after the application for contempt of court had been pursued, in September 2005, the court found evidence that even then, CD Wow! had taken no effective steps to ensure compliance with the 2004 undertakings.

Trial Judge, Justice Evans-Lombe continued in his ruling that in “meeting the criminal burden of proof” the BPI had established “beyond reasonable doubt” that CD WOW!'s actions were a “substantial breach of the court order” and that it had “no tenable ground of defence to the claimants' claim for damages for primary infringement of the claimants' copyright”.

Although the damages enquiry was due to take place in July 2007, the court felt the matter was so serious it could not wait until then. In particular, given CD Wow!’s alleged failure to co-operate with the court orders for disclosure of documentation and for payment of security, the court assessed damages in May 2007. The BPI had then already obtained a freezing order against CD Wow!’s assets and bank account in Hong Kong.

The arguments for and against

The BPI’s case was quite simple: the record industry is a business like any other. Artists need to be paid and record companies need to receive a return on their investment. CD Wow! said (in effect) fine, all well and good. But…..you should be targeting pirates, in particular, in the Far East rather than us. All we are doing is selling a licensed product, at a discount. You still get your royalty payments from all the discs we ship.

The difficulty is that although it was part of the CD Wow! case that it was simply selling in the UK discs that it was entitled to sell, where royalties still went to the record company in question, an anonymous survey by the BPI and random purchases that it carried out, showed that the reality was somewhat different.

The BPI had made repeated test purchases of albums from CD Wow! Discs such as Robbie Williams’ “Greatest Hits” and the Live Aid DVD that were being despatched from Hong Kong to UK consumers, were not discs that were licensed to be sold in the UK.

Those were the instances that CD Wow! referred to as “a little human error”. Unfortunately for them, the court found that though one or two incidences of human error could be excused, the same could not be said where it happened, as it did, on a wholesale basis (the BPI produced evidence to show 33 instances in total).

On a wholesale basis, selling in the UK albums that were despatched from Hong Kong but that were licensed to be sold in the UK, contravened the relevant legislation and was a clear case of parallel importing. Whereas CD Wow!’s initial purchase of the CDs i.e. the bulk purchase, was legitimate, even though it happened outside of the EEA, when it resold that CD in the UK, it did so illegally.

CD Wow!’s argument was simplicity in itself. It was a Hong Kong based company. It purchased its products in Hong Kong and distributed from there. If, from Hong Kong, it sold a product to a customer in the UK, that sale was a personal import by that customer. That, it claimed, was not parallel importing.

The implications

The BPI disagreed and sued and the court in May 2007 resoundingly came down in the BPI’s favour.

Interestingly, the Consumer Association described the initial CD Wow! settlement as a “sad day for consumers and a sad day for e-commerce”. It felt that the whole purpose of the Internet and Internet shopping would be circumvented, if customers in the UK were not allowed to use the Internet to buy goods from abroad.

The BPI’s case is that there is no objection to that conduct, in principle. Its objection however is to customers buying whatever they like and ignoring the law of copyright. We do have some sympathy for the statement by CD Wow!’s founder, Henrick Wesslen, who condemned the BPI’s pursuit of its company. He said that at a time when the record industry was losing out vastly to piracy, it seemed ludicrous that the BPI could set out to destroy a section of the market that was actually making it money.

So where does this all leave us? Five years down the line we have a substantial judgement and an authoritative statement of the law on parallel importing and copyright laws. But… we are left with the uncomfortable feeling that free trade or, at least, healthy competition has been suppressed. If nothing else, we are still left feeling that consumers in the UK are still paying far too much for their music, now as much as ever. However, we may not have heard the end yet, as CD-Wow! says it will fight the High Court judgement in the European Courts if it can.

ASK THE EXPERT: Are Any Gaming Sites Legal In The US?

IBLS Editor — Thu, 14 Jun 2007 17:38:00 GMT

Harry Platis of Platis Law Firm in the United States asks:

Is it legal to advertise or host a parimutuel wagering site in the USA? Is parimutuel wagering such as parimutuel poker considered illegal under the wire act, 2006 unlawful gaming enforcement Act, other gaming regulations or laws? Is parimutuel wagering on Indian tribal lands and casinos legal?