Ireland IP & Technology Law Blog : Dublin Lawyers & Attorneys for Intellectual Property, Communications & Information Technology Law in Ireland, U.S. & England

On 20 June, the Internet Corporation for Assigned Numbers and Names (ICANN), the organisation that oversees Internet domain names, voted overwhelmingly in favour of one of the biggest changes in the web’s history, allowing a major expansion in the range of web suffixes available for registration.

Under the new naming system, businesses, organisations and governments will not be confined to the existing list of 22 generic Top Level Domains (gTLDs) that include ‘.com’, ‘.net’ and ‘.org’ when they apply to register a domain name. The proposal is that domain names suffixes will now be available in almost any word in any language, that is, nearly any word up to 63 characters in length.

It is thought that the new system will be particularly attractive to companies as it will give them the opportunity to take greater control of their branding. A number of international companies have already expressed their intention to create their own branded web suffixes such as Canon, Deloitte and Hitachi.

The idea behind the change is that organisations around the globe will be able to market their brand, community or cause in new and innovative ways. Rod Beckstorm, president of ICANN, spoke of this latest development in terms of “unleashing the global human imagination” and expressed hope that “this allows the domain name system to better serve all of mankind.”

From a global trade mark perspective, the new gTLDs have the potential to be both a blessing and a curse to companies. New web suffixes will give companies the opportunity to reinforce their brand names in new ways, but at the same time may result in an increase in legal actions required to defend trademarks. ICANN’s latest proposal has not therefore been without opposition, with many large companies expressing concern that they may be forced to spend millions registering their brand names simply to protect their intellectual property.

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Commercial Court proceedings have been instituted challenging the recent decision of the Controller of Patents, Designs and Trademarks to introduce new tariff rates in respect of royalties to be paid for playing music in retail stores. The decision by the Controller, due to come into effect from 1 January 2012 next, purports to adjust the structure of the tariff applicable to retail premises.

Phonographic Performance (Ireland) Ltd (“PPI”), which acts as the centralised administrator of record company rights in Ireland, is claiming that the decision by the Controller would lead to a significant reduction in the amount of royalties being received from music played in retail stores across Ireland and that the Controller was acting outside its powers in making such a ruling.

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A recent ruling by the European Court of Justice (ECJ) on 12 July 2011 in the L'Oreal v. eBay case is an interesting one as it goes some way toward clarifying the law with regard to IP infringement control in the area of e-commerce.

L’Oreal claimed that eBay was liable for trademark infringements committed on its website, not only by permitting counterfeit products to be sold through its platform but also by virtue of promoting these products.

eBay refuted this contention, arguing that it merely provides a contact facility between sellers and buyers, and that it cannot be held responsible for their actions. eBay also claimed to have made a concerted effort to minimise the amount of IP infringements that take place on its site by investing considerable resources in terms of personnel and finances, in an effort to insure maximum protection of the rights of trademark owners.

In its judgement, the ECJ clarified a number of important issues. They held:-

• that the proprietor of a trade mark may rely on his exclusive right as against an individual who sells trade-marked goods online only when those sales took place in the context of commercial activity;
• that a trade mark proprietor is entitled to prevent an online marketplace operator from advertising for sale, goods bearing its trade mark using a keyword which is identical to the trade mark, where that advertising does not enable reasonably well informed and observant internet users to ascertain (easily) whether the goods concerned originate from the proprietor of the trade mark or from a linked business or a third party;
• where a seller on an online marketplace infringes trademarks, the marketplace operator will be deemed to have played an active role and thus will be liable where it provides assistance to the seller such as optimising the presentation of the online offers for sale or promoting those offers. Even where it does not play such an active role, the ECJ held an operator may still be liable where it was aware of facts that  a diligent operator should have realised meant that the offers in question were unlawful; and
• injunctions could be obtained against marketplace operators requiring that operator to take measures to prevent future infringement of those rights.
 

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Ireland has transposed the new E-Privacy Directive 2009/136/EC. The Directive amends the E-Privacy Directive 2002/58/EC and has attracted much attention due to the new rules it imposes in relation to the use of internet cookies.

The new rules are contained in the European Communities (Electronic Communications Networks and Services)(Privacy and Electronic Communications) Regulations 2011 and took effect from 1 July 2011 (the "New Regulations"). While it is expected that a pragmatic approach will be taken by the Office of the Data Protection Commissioner to enforcement in relation to the new rules on cookies, unlike other jurisdictions, there is no formal compliance grace period in Ireland.

What are 'Cookies'?

The current law
Up to now, the law concerning the use of cookies required internet users to be informed of the use of cookies and to be offered the right to refuse such use. In practice, many websites have complied with this requirement by using their privacy policy to notify people on how they use cookies and giving users the opportunity to 'opt out', by changing their browser preferences. An exception to this opt-out approach exists where the cookie is strictly necessary in order to provide a service explicitly requested by the user.

The new rules
There is no specific reference to "cookies" in the New Regulations. However, Regulation 5 deals with Confidentiality of Communications and in particular prohibits use of "an electronic communications network to store information or to gain access to information already stored in the terminal equipment of a subscriber or user...".

Exceptions
The exceptions, each of which must be met, to this prohibition are:

Where the subscriber or user has given consent; and where clear and comprehensive information is given in accordance with the Data Protection Acts 1988 and 2003 which is prominently displayed, easily accessible and includes, without limitation, information on the purposes for which the information will be processed. Importantly, where information is stored merely to enable transmission of communications across networks or where it is strictly necessary in order to provide a service explicitly requested by the subscriber, then, the new rules don't apply.

The New Regulations require that technical and user friendly means to obtain consent are used. However the Regulations do not specify the technical or operational steps to be taken, the type of consent that is required and when this consent should be obtained.

Guidance
The Office of the Data Protection Commissioner has issued guidance on the Regulations, which confirms that the method of obtaining consent that was acceptable under the previous legislation, relying on existing browser settings, will no longer be sufficient. Browser settings are regarded as having some deficiencies as a method of obtaining consent. For example, some cookies can circumvent browser settings.

Key considerations for companies with websites

In the light of the Data Protection Commissioner's guidance, it will be incumbent on individual companies to carry out their own assessment of their activities from a technical and compliance perspective, to ascertain:

• If their activities fall within the scope of Regulation 5 (3). This is likely to require analysis of the technical operation of their websites and the extent to which they may be facilitating 'cookies' that actually capture personal data through links or other associations with third parties;

• If any of the exceptions apply. For instance, where cookies are essential in order to complete an online purchase transaction, the compliance burden for such website operators may be less than where cookies are intentionally used as part of  targeted profiling and marketing of customers/website visitors;

• How to categorise cookies that are to be used, the nature of the consent that will be required and the effective means to obtain that consent. This will present the challenge of balancing the need for website users to have a positive experience on a particular website with the need to comply with the New Regulations. For example, listing specific cookie filenames on websites and providing information on their purpose may become increasingly common;

• Due diligence on existing website terms and conditions and other notices to assess what changes must be made to ensure the obligations contained in Regulation 5(3) are met. It is likely that we will see cookie specific notices and banners on websites that allow users to see the relevant cookies and site data and make informed choices about settings. A good live example can be found at the UK Information Commissioner's website.

Consent
There remains uncertainty in relation to the core issue of consent. For instance, the New Regulations do not specify exactly when the consent should be obtained, whether a single consent will suffice for repeat browsing activity and changing cookies or how explicit the consent needs to be.  However, it is clear that the law in Ireland has now shifted in a manner that rules out reliance on a passive approach to consent and more interaction with web users will be required.

Implications
The end result is that companies relying on online interaction with customers will need to be ever more alert to the need for pro-active steps to ensure their legal compliance with these New Regulations. Given the lack of a formal grace period in Ireland (unlike the UK) and the increased financial penalties for non-compliance that have been introduced under the New Regulations, taking steps to post interim notices and other information in relation to steps being taken to comply with the new rules would be prudent, pending implementation of the necessary technical and functional changes to websites.

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