Law 2.0: An updated European legal framework for the digital society?

by DLA Piper
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Introduction.

Bill Gates once said that “(t)he day is quickly coming when every knee will bow down to a silicon fist, and you will all beg your binary gods for mercy.”. Although this may be somewhat of a witticism, no one doubts that technological evolution plays a substantial role in everyday life. Just to name a few, the rise of social media, smartphones and tablets and the apps that are designed for them indeed creates new possibilities on an almost daily basis whilst simultaneously posing social, economic and political questions. At least as important are the legal issues related to this evolution.

With the changeover to the new millennium, and in the aftermath of the dot-com hype, a legal framework was created on European (and subsequently national) level in order to allow governments, civilians and undertakings to act within the virtual environment. Examples are the legislation on electronic commerce, electronic invoicing, e-privacy, e-money and electronic signatures. As it turned out that the proposed measures were soon outdated by new technological evolutions, the EU legislator was necessitated to frequently adapt the existing framework on a case-by-case basis, resulting in a patchy legal framework.

Recent technological evolutions and trends, some of them discussed below by way of example, bring along new legal concerns which are not yet addressed and do not fit within the legal framework currently in force. The EU legislator tries to tackle some of these issues on an “ad hoc” basis, e.g. the recent legislative requirements on the use of cookies on computers or other devices, but a global policy did not exist until recently. As such, there was an element of truth in Mr. Gates’ quote as the EU legislator now seems to be huffing and puffing to catch up with and to regulate trends, often existing already for quite some time.

The European Commission is aware of this problem and has prepared an action plan, called the Digital Agenda for Europe, with the intention of presenting a global strategy and which must ultimately result in a boost and further development of digital technologies. This strategy includes a modernization of the currently existing legal framework. The Digital Agenda for Europe is discussed in brief further below.

Some recent ICT trends and legal challenges.

According to Neelie Kroes, Vice-President of the European Commission and responsible for the Digital Agenda, “(a)n Internet of Things with intelligence embedded into everyday objects is the next big thing“, which the EU should support. Internet of Things refers to the evolution where more and more daily objects are being equipped with electronic technology which allows these objects to capture data about the real world and to output such information. A car telling its owner that the car should be maintained, a fridge reporting that you’ve ran out of milk, etc. Although the development of the Internet of Things is supported on an EU level, the Digital Agenda mentions several concerns including privacy, liability and (internet)security. Ethical questions are raised as well as more and more personal data become public good, as a result of which the border between private and public spheres becomes blurred. On the subject of Internet of Things, several initiatives have already been launched by the European Commission, such as a Communication (with an action plan) and a Recommendation (on privacy and data protection principles in applications supported by radio-frequency identification), both issued in 2009.

The coming into existence of new internet intermediaries is an important trend as well. Telecom operators allow the user to make a physical connection with the network, whereas internet access providers identify the user with an IP address and give the user access to the internet. On a third level, several intermediaries are active who offer internet services (e.g. hosters and caching providers). Recently, the intermediaries of the third level are accompanied by internet giants such as internet search engines, social media providers, retailers, auction sites and online encyclopedias. These new intermediaries and the role they fulfill raise questions concerning liability regarding incorrect information, placement of content which violates intellectual property, liability for user generated content, the applicability of the liability exemptions under EU law to these intermediaries, etc. Such issues also bring along concerns relating to applicable law and competent courts.

When discussing recent ICT trends, cloud computing cannot go unnamed. Being one of the most eye-catching buzzwords of the latest years, cloud computing refers to a form of computing allowing to access applications and data through the means of intermediaries that offer services over the internet. Cloud computing offers advantages such as scalability, economics of scale and the use of internet to optimize the solution. Although undoubtedly advantageous for users (often undertakings), cloud computing also entails certain challenges on the level of data protection, liability in the event of loss, confidentiality, data portability, vendor “lock-in” and others. On a European level, there have been several initiatives to deal with such issues. In May 2011, the European Commission launched a public consultation on cloud computing of which the findings were presented in a report of December 2011. Working Party 29, an advisory body for the European Commission with respect to data protection legislation in the EU, also issued an opinion on cloud computing.

A visual example of the digitalization of the production process is 3D printing. With a click on the computer mouse, a digital file is sent to the 3D printer (as is the case with a 2D printer) which then prints layer by layer until a tangible object is created according to the computer model. Several personalized accessories (e.g. a hearing aid which must be tailored to specific personal features) are already manufactured in this way. The exploded Aston Martin 1960 DB5, a rare and expensive model, in James Bond’s newest Skyfall was a 3D printout of the original. But this new production process raises a lot of questions too. Intellectual property on the product manufactured for one. Product liability may pose legal challenges as well as several entities are involved (manufacturer of the printer, the product with which the object is made, the manufacturer itself selling on the manufactured goods, etc.).

Digital Agenda for Europe.

The purpose of the Digital Agenda is to tackle new legal issues, some mentioned above, in a way more holistic than the ad hoc approach that has been generally the case up until now. The Digital Agenda consists of seven “pillars” and an international aspect, each containing several action points (101 action points in total). The first pillar is the establishment of a “Digital Single Market”, including several propositions of changes to the existing legal framework amongst others the adaptation of the Privacy Directive which resulted in a proposition of a Regulation, currently being discussed in the European Council and expected to enter into force end of the year 2014. The Directive on Electronic Commerce is likely to be changed as well, by means of which the Commission intends to boost consumer trust in cross-border purchases of products and services. Another point of attention is the establishment of a Single European Payment Area and further facilitation of electronic invoicing. Other points of attention are the simplification of a pan European license on online works, the proposition of a Charter of EU online rights, a proposal on online dispute resolution platforms, etc.

The second and third pillar are “Interoperability & Standards”, including technical and operational action points which must lead to a better framework for normalization, standardization and interoperability, and “Trust & Security” with a particular emphasis on fighting cybercrime and to support cyber safety. “Fast and ultra-fast Internet access” and “Research and innovation” are pillars four and five. Action points on “Enhancing digital literacy, skills and inclusion” (pillar six) are intended to tackle issues related to the digital divide and lays emphasis on enhancement of skills, introducing people to the digital world, education, etc. Pillar seven, “ICT-enabled benefits for EU society”, is intended to support the role of ICT in reducing energy consumption, supporting ageing citizens’ lives, revolutionizing health services and delivering better public services.

In December 2012, the European Commission has distilled from its 101 action points, seven priorities for the digital economy and society, to be achieved during the years 2013 and 2014. Particularly from a legislative point of view, it is important to note that the Commission proposes to deliver a strategy and draft Directive on cyber-security. Further, it intends to promptly commence the updating of the EU’s copyright framework.

Conclusion.

The currently existing legal framework needs a thorough update so as to avoid it losing its relevance in an ever changing technological environment. The European Commission tries to upgrade the legal framework to a version 2.0 by revising several existing legal instruments and proposing new initiatives. Respecting policy principles such as technology neutral legislation and co-regulation must ensure the long-term validity of the legal provisions. However, the question arises whether maintaining a dual legal regime for the offline and online world is still necessary, given the on-going convergence between these two worlds. Separate legal conditions for online electronic contracts, signatures, payments and others seems to be a sign of an out-of-date view on reality neglecting to take into account the increasing convergence between these two worlds. In our view, we are likely to expect within a few years a legislation 3.0, acknowledging such convergence.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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