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Intellectual property law must reflect tech changes

Hargreaves review into IP is only first step as existing laws are increasingly unfit for purpose…

When the Hargreaves review appears, it should lead to telling changes in the UK's intellectual property legal framework. But the question of how to create harmonised rules for the internet will almost certainly remain, says lawyer Patrick Van Eecke.

In November 2010, David Cameron announced an independent review into how the intellectual property framework could be improved to enable the business models of the 21st century. This review, chaired by Professor Ian Hargreaves, is due to report any day now.

That the law requires a review is undeniable. The arrival of the internet has brought about a seismic change in the way organisations are run, people interact and information is accessed. Law makers worldwide created legislation for the digital world at the end of the last century but since their adoption, these laws have been confronted with myriad new technological developments.

DLA Piper recently launched the first part of a significant piece of qualitative research that investigated the online challenge to traditional business models in the report, Shifting Landscapes, part one of which is available for download. So what are the key challenges that the internet poses for businesses?

Internet challenge 1: Legal duality

The laws that were pivotal for the growth of the information society are increasingly unfit for purpose. These issues have been further exacerbated by the inherent legal duality - the assumption that the online environment must be regulated differently to the offline environment.

Copyright and online intermediaries: Need for legal clarity

The need for legal clarity in the area of copyright and online intermediaries is paramountPhoto: lululemon athletica

This legal duality is increasingly conflicting with the growing convergence and blurred distinction between online and offline. Another development is the significant formalism of several laws, which reflects the legislators' lack of trust in the digital environment.

For example, the European E-Commerce Directive requires online service providers to announce in advance whether or not the concluded contract will be filed by the service provider and explain what technical steps can be taken to identify and correct input errors during the ordering process.

No such formalities apply in the offline world, where most contracts can be concluded simply by party consent.

Internet challenge 2: Inappropriate legislation

Realising the potential of online channels is mainly about consumer behaviour. The online profiling of individuals has become an essential aspect of many web 2.0 services and business models.

However, the legality of profiling activities is unclear. While it is not contested that some profiling data qualifies without any doubt as personal data - because it can be directly linked to individuals - there is a debate as to whether this situation is also the case for data that cannot be linked to a natural person, so-called abstract profiles.

If abstract profiling would also be subject to the European Data Protection legislation, the legal framework may hinder the development of such services and business models, even though the privacy risk in processing abstract profiles is relatively low.

Internet challenge 3: Online intermediaries

The role of online intermediaries, such as auction platforms, social networks, video-sharing websites and cloud-computing platforms, has become increasingly significant. They host the infrastructure and the software through which information is processed and on which online communities are built. However, their legal position remains difficult. From the moment an online intermediary gains sufficient popularity, its business model will be scrutinised, particularly from a copyright point of view.

Although European ecommerce legislation is intended to protect such online intermediaries against liability claims caused by the illegal content of their users, case law illustrates that...

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