Through significant efforts, the legal system has adjusted to the changes in the information and communications technology of daily corporate life—changes at the intersection of the market, technology, and law. Organizations must make adjustments on their part as well in order to deal with the consequences resulting from these changes in the legal system. The observation that led to this essay was that these adjustments represent a greater challenge than the already decreasing entropy surrounding concepts such as “e-commerce law” or “cyberlaw” would suggest. Our initial foray into the concept, characteristics, responsibilities and organizational guiding principles of e-Compliance confirms this observation.

E-Compliance, as discussed in this article, is confronted with the phenomenon of a close interconnection between law and technology, a prominent dynamization of the law, massive internationalization of issues and legal problems, as well as a strong increase in the significance of soft law. These characteristics, which in part may also apply to traditional areas of compliance such as financial market regulation, call in their interplay for the further development of compliance concepts as well as adaptation of the affected aspects of corporate organization. Due to the increasing amalgamation of corporate organizational nexus and ICT, the symbiotic relations between traditional compliance and e-Compliance will be increasingly amplified. The view that e-Compliance represents merely a single risk area among the many of compliance is therefore outdated in our opinion. E-Compliance is actually a multidimensional and multidisciplinary task, although there are certainly areas of law that are particularly affected by digitization (or also which particularly impact digitization) and therefore are of particular importance for the field of e-Compliance.

Thus, in conclusion, the authors do not posit a special “e-Sphere” within or without existing compliance departments. Rather, we argue for an integrated and comprehensive compliance concept that appropriately makes allowance for the structural and substantive peculiarities of e-Compliance as outlined in this essay and stays abreast with the pace of digitization.

Please contact Daniel or me if you have comments.

Here’s some background. The EU Distance Selling Directive, pro memoria: applicable to any contract for goods or services involving an EU consumer, regardless of whether the supplier has a physical or virtual presence in the EU, grants consumers a right of withdrawal from any distance contract — a right that cannot be waived by contract. Article 6(1) of the Directive states that consumers have at least seven business days to withdraw from the contract without penalty and without giving any reason. However, the Directive contains an exemption for, inter alia, “contracts for the provision of transport services.”

In the present case, the UK’s Office of Fair Trading brought proceedings before the High Court of Justice against UK online rent-a-car company easyCar. The terms and conditions of the easyCar’s hire contract state that consumers cannot obtain a refund if the contract is cancelled, except in unusual and unforeseeable situations (such as serious illness, war, natural disasters, etc.) The High Court asked the ECJ whether car hire services are “transport services” for the purpose of the exemption contained in the Directive.

According to the ECJ, the Directive’s “transport services” exemption sets forth a sectoral exemption which relates generally to services in the transport sector, i.e. can cover all contracts in this field, since the term “transport” refers not only to the action of moving persons or goods, but also includes making the means of transport available to consumers.
Focusing on the legislative context in which the term is used, the ECJ further held that the European legislator intended to protect consumer interests, but also to protect those of suppliers of certain services to avoid disproportionate consequences arising from the right to withdrawal. Since rental car companies must make arrangements for performance of the agreed service on the date fixed at the time of booking, the ECJ held that rental car companies suffer the same consequences in the event of cancellation as any other supplier of transport services.
Therefore, the ECJ concluded that “’transport services’ includes contracts for the provision of car hire services, so that such contracts cannot be cancelled by consumers without penalty.”

As my students must have realized by now, I have a bias to think and — worse — talk in abstract concepts (call it the European blind-spot). Tonight, however, I won’t talk much about theoretical frameworks, promised. Rather, I would like to present a couple of examples illustrating the above-mentioned shift from passive receivers to active users and discuss them in an open format. While looking at the examples, please keep the following questions in mind:

1. What are the opportunities and challenges associated with the shift as illustrated by each example?
2. What are specific areas of concern or emerging legal/regulatory issues?
3. Do we need to address these concerns? If yes, what’s the appropriate regulatory approach (social norms, markets, law, technology)?
4. What are potential effects — also side-effects — of regulatory intervention?

Okay, that being said, here are the examples that we will use in class tonight. Please note that I provide positive examples, nice stories, but — of course — also at least problematic examples, some of which you might find disturbing. (Again, we’ll discuss these examples in class and provide enough context to make sense of these illustrations; however, I want to include the examples here so that our distance students can easily access them.)

(1) Research and Knowledge

• Wikipedia (1, 2, 3) [update: for a wonderful illustration how wikipedia works, click here. Via Luis Villa]
• Health information (1, 2)

(2) News Reporting & Journalism

• CBS saga
• “Every citizen is a reporter” (1, 2)
• North Korea zone
• Dean campaign and the Bloggers

(3) Entertainment

• Music & video clips [e.g. mash-ups] (1, 2, 3)
• Fan fiction (1, 2)
• Online Games (1)

(4) Social & Corporate Criticism

• Endless love
• State of the Union (1, 2)
• Media enterprises (1, 2)
• VictoriasSecret (1, 2)
• Other illustrations (1, 2)

(5) Commerce

• Online Reputation Systems (1, 2)
• Advertising (1, 2, 3, 4)

We’ll end the class with some big-picture-questions, including:

1. What are the normative dimensions and criteria to assess the shift from passive receivers to active users?
2. What are key areas of concern across the examples we’ve discussed?
3. Applying old laws or need for shift in the legal/regulatory paradigm?
4. Issues down the road?

The teaching team is looking forward to discussing these and other questions with you tonight.

The report concludes that surprisingly little is know about consumers’ acceptance level of DRM, and what users’ expectations are regarding the use of digital content. The report, inter alia, calls for a better involvement of the consumer side and a joint dialogue between the market players.

The report will be updated. Three pointers to Berkman reports and papers in this context:

* re section 6.5 of the report on alternative business models, see also “Content and Control: Assessing the Impact of Policy Choices on Potential Online Business Modles in the Music and Film Industries.”

* re section 4.2 on the EU-Copyright Directive, see also “Transposing the Copyright Directive: Legal Protection of Technological Measures in EU-Member States,” and the respective Berkman project website.

* re section 4.4 on interoperability, see John Palfrey, Holding Out for an Interoperable DRM Standard, in Christoph Beat Graber, Carlo Govoni, Michael Girsberger, and Mira Nenova (eds.), Digital Rights Management: The End of Collecting Societies? (Forthcoming, April 2005.)

The online environment and new digital technologies threaten the viability of the music and film industries’ traditional business models. The industries have responded by seeking government intervention, among other means, to protect their traditional models as well as by developing new models specifically adapted to the online market. Industry activity and public debate have focused on three key policy areas related to copyright holders’ control of content: technical interference with and potential liability of P2P services; copyright infringers’ civil and criminal liability; and legal reinforcement of digital rights management technologies (DRM).

Special thanks — and congratulations — to Derek Slater and Meg Smith of the Berkman team for their work.