Effect of Software Technology and Electronic Transactions - Assignment Example

ID No. Effect of Software Technology and Electronic Transactions upon UK E-Commerce Law E-COMMERCELAW: ITS GROWTH AND RELATED CONCERNS Electronic commerce is essentially global in character (Electronic Commerce 1). E-commerce and online transactions are made possible through the application of software technology. A software is a “set of instructions made into a program” that can be “installed or removed from the computer by the operator” and requires raw data to complete its function (Redding par. 5). As an intellectual property, a computer software is protected by S3 (1)(b) Copyright, Design and Patents Act 1988 (CDPA); Copyright (Computer Programs) Regulations (1992) (SI 1992/3233 implemented the Council Directive 91/250/EEC); and international treaties and agreements (par. 1). United Kingdom introduced in 1992 the protection of the software source code as a copyright literary work (Ellis par. 1). Under intellectual property, protection extends to the totality of ideas in their “expressed, recorded or implemented form” (par. 2). Thus, mathematical formula used in the source code is not protected but only the specific expression that includes the formula (par. 3). Intellectual property rights are likewise protected by a contract with users through licenses (limits the copy to be used, usage only within a particular area) (par. 4). UK gives legal protection to software through copyright, patents, designs, trademark, confidential information, and trade secrets (pars. 7-23). Patenting requires that the software should have an industrial application as required by Section 1 (1c) Patent Act (1977) (Redding par. 6; Intellectual Property 8) and as part of the industrial process (Redding par. 5). A patent is renewable every four years up to a period of 20 years enabling the owner exclusive right to exploit the invention (par. 5). The Copyright (Computer Software) Amendment Act (1985) was the first English law that provided protection to software (par. 19). It amended the Copyright Act (1956) wherein the protection to literary work was applied to computer programs (par. 19). The 1985 Copyright Act was repealed by the CDPA S303 (2) schedule 8 (par. 19) where computer program was defined as literary work in CDPA S3 (1)(b) (par. 21). The Copyright (Computer Programs) Regulations (1992) (SI 1992/3233) implemented the EC Directive on the Legal Protection of Computer Programs (par. 19). Although copyright law, contract and license agreements provide protection to computer software (par. 12), copyrights and the common law of confidence are better than patent (par. 22). Copyright protection extends to 50 years to be reckoned from the end of the year the owner dies while computer generated works is protected for 50 years that begins from the end of the calendar year the work was created (par. 22). As expansion of electronic commerce is inevitable, the security and trustworthiness of online transactions through authentication and digital signatures remain a continuing problem (Spyrelli par. 2). Authentication is secured under the current technology through encryption utilising two related keys to create a digital signature (par. 3). Patrick Cooper, applications and data services head, Department of Trade and Industry, said that network authentication and security remains a concern in the IT industry (Donoghue pars. 1-2). An iPod with a digital certificate or signature, Cooper said, can be plugged into a computer to provide the online authentication and solve identity management problems (pars. 3-4). He added that iPod is more cost-effective than the National ID Card equipped with a PIN or a password (par. 5). The first law that facilitated electronic commerce in the United Kingdom is the Electronic Communications Act 2000 (ECA) which was enacted “to build confidence in electronic commerce and the technology underlying it” (Electronic Commerce 1). It embodied the approval of cryptography, granted recognition to electronic signatures, and provided the mechanism to remove legal barriers to the use of electronic communication and storage (2). Many of the e-commerce legislations in UK resulted from the implementation of EU Directives (Charlesworth 2). Directives passed under the auspices of EU that affect e-commerce include the 1995 Data Protection Directive; 1997 Distance Contracts Directive; 1999 Electronic Signatures Directive; 2000 E-Commerce Directive; 2000 E-Money Directive; and the 2002 Privacy and Electronic Communications Directive (2). Proposing a Directive to the European Commission up to the implementation of Member States may take more than a decade (e.g. Data Protection Directive) (3). The law may also hamper the expansion of e-commerce. In m-commerce, for instance, the mobile phone companies’ plan to use mobile phones as electronic wallets was hampered by the implementation of E-Money Directive that classifies money placed in prepay accounts to buy other services as e-money, according to the rules of the Financial Services Authority, and therefore should be held in trust (3). Placing the money in trust would limit the operation of mobile phone companies (3). The EU Distance Selling Directive was implemented in UK through the Consumer Protection (Distance Selling) Regulations 2000 that took effect on October 31, 2000 (4). The Regulations apply to contractual transactions negotiated as distance sales or provision of services to clients on the internet, interactive digital television, mail order, telephone, etc., while business- to-business transactions, sale of land or buildings, all types of auctions, vending machines and public pay phones are excluded (4). Implementing the EU E-Commerce Directive is the Electronic Commerce (EC Directive) Regulations 2002 that took effect on October 23, 2002 and relates to ‘information society services’ (e.g. B2B and B2C services) (5). ‘Information society services’ refers to “any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service” (Electronic Communications par. 22). Also included in the coverage of the Regulations are the following: a) services provided to the end-user without fee (funded by advertisement), b) services that facilitate online transactions, such as interactive online shopping, and c) online trade and advertising through the internet or mobile phone regardless of how the goods or services will be delivered (Charlesworth 5-6). Excluded in the scope of the Regulations are as follows: a) actual goods, b) off-line delivery of goods or services, c) off-line components of the transaction negotiated online such as off-line contracts, and d) online activities which are not commercial (6). The 1999 Electronic Signatures Directive is implemented in UK by the Electronic Communications Act 2000 and Electronic Signatures Regulations 2002 (11). The Electronic Communications Act 2000 laid down the power of the government to devise accreditation procedure for business that offer encryption and digital signature services; and amend and clarify terms such as ‘writing, signatures and paper’ to meet electronic requirements; as well as admissibility of e-signatures in legal proceedings according to the technology used (12). Under Electronic Signatures Regulations 2002, the Secretary of State for Trade and Industry is required to maintain a public register of ‘certification service providers’ (CSPs) of those offering qualified certificates, impose adherence to standards, and publicise inability to comply with the standards (12). A certificate refers to an electronic confirmation that a particular e-signature is owned by a named person (12). The 2001 Invoicing Directive implemented by the Value Added Tax (Amendment) (No. 6) Regulations 2003 on January 1, 2004 gave further recognition to the importance of e-signatures (22). UK implemented the E-Money Directive through the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2002 and the Electronic Money (Miscellaneous Amendments) Regulations 2002 (15). The laws define e-money (stored value, prepaid products or cards, electronic purses), its regulation, accreditation of institutions planning to embark in the activity and financial requirements, etc. (15). The Financial Services Authority regulates and authorises the activity and institutions engaged in e-money (15). It is imperative for the government to address the health and safety of online consumers. One concrete example is the case of a 64-year old lady who bought oral steroids online from Thailand for her chronic fatigue (Warning pars. 3-4). Due to failing vision, the woman went to Sunderland Royal Infirmary and was diagnosed with cataract and glaucoma resulting from the intake of steroids (pars. 5-6). When the doctors searched the internet, they found out that the dosage of the steroids sold was high enough to cause complications which could be avoided if the lady noticed the problem early (pars. 7-9). The Royal Pharmaceutical Society approved only two online pharmacies in UK (Timmins 8). UK does not allow that prescriptions be transmitted electronically, thus, the hard copy of the prescription must be posted to the online pharmacy (8). Prescription can be obtained from a practitioner under Section 58 of Medicines Act 1968 or from a practitioner at the pharmacy retail outlet (Thompson 202). However, the law imposes the obligation upon the seller to comply with the requirements and not the buyer, therefore, if a buyer purchases online drugs from another country without the requisite prescription, the transaction cannot be regulated (202). The Medicines Act does not allow importation of medicine except those under a product license, but importation for personal or household use is exempted (202). The exemption is intended to facilitate treatment of persons while traveling beyond territories (202). According to the head of professional conduct at Royal Pharmaceutical Society, Steve Lutener, the Medicines Act was passed to protect the public, and Section 58 prescribes safe use of medicine after consultation with a doctor (202). One way to avert online transaction of medicinal products is to prohibit advertisement of prescription drugs (202). The Medicines and Healthcare products Regulatory Agency (MHRA) implements strict rules on advertising of medicinal products on the internet and had the internet service providers close down seven sites in UK and caused seven operators to modify their sites (202). MHRA has prosecuted three cases and referred 12 to other government offices or overseas enforcement agencies (202). CONCLUSION The laws pertaining to e-commerce should develop parallel to the growth of e-commerce as innovations and new creations are continually being introduced into the market. With the emergence of software programmes, laws must be passed to give them protection and promote further development. The onset of electronic transactions allowed global international transactions that can be consummated beyond territorial jurisdictions. UK, being a member of the European Union, must subscribe the EU Directives on matters relating to e-commerce although its legislation can be tailored to the specific context existing within the territory. However, the growth of e-commerce is slow due to the length of time required to pass a proposal to the European Commission up to the implementation of the Member States. The trading prospects offered by the internet is faster than the law can cope up, the latter merely reacting to the changes (Thompson 202). The existing e-commerce laws try to address the problems besetting online transactions that cover authentication, digital signature, encryption and several others. But identity theft, fraudulent transactions and illegal sales still proliferate. Thus, the government must pass new laws to address these recurrent problems. The law on online sale and purchase of drugs should likewise be modified to avert illegal sales and sales of fake drugs within UK. The current law that allows households to purchase drugs for personal use is itself the provision that allows online purchase of drugs which might not be fit for humans. The limitation in the law is compensated by enforcement agencies by confiscating fake drugs or raiding operators that advertise drugs online. The suggestion of Mr. Cooper of DTI to interface iPods with computers to resolve the problem in identity and signature authentication shows that the line agencies seek for solutions which the law cannot provide adequate protection. Since most of the time, the law is created to meet existing demands, it is through technology itself that the current problems besetting online transactions and e-commerce can be solved. More inventions and innovations should be made to patch up the loopholes in the technology that allow illegal activities. But when these new inventions come into existence, the government must readily embrace them and legislate appropriate laws for their protection, promotion and regulation. In this manner, the growth of e-commerce laws in UK will be enhanced and at the same time, online transactions will gain credibility. Works Cited Charlesworth, Andrew. JISC Legal Briefing Paper: Developments in E-commerce Law. 20 June 2004. 14 October 2008. . Donoghue, Andrew. UK Government: Fight Online Fraud with Free iPods. 12 January 2006. 13 October 2008. . Electronic Commerce: Formal Requirements in Commercial Transactions. Advice from the Law Commission. December 2001. 13 October 2008. . Electronic Communications. The Electronic Commerce (EC Directive) Regulations 2002. Statutory Instrument 2002 No. 2013. 30 July 2002. 14 October 2008. . Ellis, L. Intellectual Property Rights and Software Protection – A Programmer’s View. EzineArticles.com. 2008. 15 October 2008. . Intellectual Property Office. The Patents Act 1977 (as amended). 17 December 2007. 16 October 2008. . Redding, Philip. Report on the Protection Afforded Computer Software in the Face of Computer Software Piracy. Journal of Information. Law and Technology. 30 September 1996. 16 October 2008. . Spyrelli, Christina. Electronic Signatures: A Transatlantic Bridge? An EU and US Legal Approach Towards Electronic Authentication. 23 February 2005. 15 October 2008. . Thompson, Michael. Buying Medicines on the World Wide Web: What is Legal and What is Not. The Pharmaceutical Journal. 271.7262 (16 August 2003): 1 p. Online. Internet. 17 October 2008. . Timmins, Nicholas. Pharmacists Online. 1 September 2000. 17 October 2008. . Warning of Online Drugs ‘Danger’. BBC News. 10 August 2006. 13 October 2008. . Word Count: 1,995 Read More