ISPs win crucial legal protections

Internet service providers and network operators in the UK have won protection from legal action over content held on, or passing through, their networks. Measures providing the protection are contained in the Electronic Commerce (EC Directive) Regulations 2002, which were finally published by the government on Monday, less than two weeks before they are due to come into force.

UK e-tailers have also gained concessions in the final draft of the regulations, and spammers will have to clean up their act.

The new rules were generally welcomed by the ISP industry, which had lobbied hard in the wake of a case that saw Demon Internet successfully sued for defamatory remarks posted on its news groups. Demon said at the time that with more than a million messages a day posted to the service, it was not possible to scan them all.

But one key issue has still not been satisfactorily resolved, says the ISP Association (ISPA): how ISPs should remove content once they have been warned that it may be illegal under criminal law or actionable under civil law such as that of libel or slander. Although Demon was warned about the message on its server, it did not remove it -- a decision backed by other service providers at the time, who contented that it was untenable for ISPs to police their servers.

Although the final regulations have removed doubt over limitations on civil and criminal liability of service providers who transmit, cache or host third-party content, they still do not outline a formal procedure for the removal of illegal content (known as notice and takedown) or provide statutory backing for notice and takedown codes of practice, says ISPA. The regulations do go some way to defining how service providers might be deemed to have "actual knowledge" of the illegal nature of third party content but according to ISPA secretary general Nicholas Lansman, more is needed.

"Formal procedures governing the removal of illegal material (notice and takedown) need to be developed to further clarify the rights and responsibilities of service providers," said Lansman, adding that the government has agreed to meetings with industry on how such issues will be addressed by codes of practice.

Lansman said that ISPA will also continue to push for clarification on limiting the liability of other types of intermediaries, such as providers of hyperlinks, location tools and content aggregation, "as the absence of legislation creates legal uncertainty".

John Enser, partner in the media and communications technology group at City law firm Olswang, said ISPs had done well out of the legislation. "If you talk to ISPs then they will quibble and say the don't have a definition of 'actual knowledge', but compared to where they stood under English defamation law they are in a good position," said Enser.

Online retailers also appear to have won major concessions in the final version of the regulations, even though new obligations are imposed on them.

Under the new law, which comes into force on 21 August, Web sites hosted in the UK that sell goods or services will have to include a geographical address, email address and VAT number where applicable. Prices must clearly state whether they include VAT and delivery costs.

According to John Enser, the biggest win for UK e-tailers is a measure that makes it easier for them to ensure that if they are sued, the case will be heard in an English court. Recent changes to the Brussels Convention mean that if a European company sells products or services in another European country then any legal action against it can be taken in that destination country, but now UK e-tailers will have much greater legal certainty about where any action may be taken.

"It doesn't mean there is no risk of being sued abroad," said Enser. "But it does put e-tailers in better position than they otherwise would have been." The quid pro quo, said Enser, is the extra amount of red tape that companies will have to deal with but even this, he said, is "not as onerous as it once threatened to be".

Read an in-depth analysis of the new regulations at ZDNet UK's Tech Update.

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