From Clay Tablets to AJAX: Replicating Writing in Internet Transactions

This article addresses the absence of paper and the challenges of transposing the traditional legal concepts of “writing” and “document” into an environment consisting of interactive and inter-

connected files. Both “writing” and “documents” are concepts that rely on tangible carriers, such as paper. 1 Accordingly, legal principles involving either concept presume not only a certain durabil-ity, but also, the stability and confinement of the information conveyed. What happens when writing is no longer contained on paper? Can writing exist without documents? Is it correct to speak of a “docu-ment” if its contents are transient and its scope is difficult to determine? At the current stage of devel-opment, legal analysis is incapable of answering any of these questions. Apart from exposing the inad-equacy of popular attempts at replicating writing and documents in Internet transactions, this article pro-vides new points of departure for future legal analysis and regulatory efforts in the area of e-commerce.

Despite the intuitive association of the terms “writ-ing” and “document” with formalities, this article

Continued on page 5

E D I T E D B Y D L A P I P E R

F EBUARY 2012

V O L U M E 1 5

N U M B E R 8

JOURNAL O F

Law & Business

Eliza Mik is assistant professor of law at Singapore Management University. Prior to joining SMU, she worked as in-house counsel for a number of software companies, Internet startups, and telecommunication providers in Poland, Australia and the United Arab Emirates, mainly advising on e-commerce and software licensing,

From Clay Tablets to AJAX: Replicating Writing and Documents

in Internet Transactions By Eliza Mik

FROM CLAY TABLETS TO AJAX: REPLICATING WRITING AND DOCUMENTS IN INTERNET TRANSACTIONS . . . . . . . . . . . . . . . . . . 1By Eliza Mik

USING THE INTERNET TO YOUR COMPANY’S ADVANTAGE IN DEFENDING AGAINST A WHISTLEBLOWER ACTION. . . . . . . . . . . . . . . . . . . . . .3 Michelle Sherman

THE EUROPEAN COMMISSION’S DRAFT COMMON EUROPEAN SALES LAW . . . . . . . . . . . . . . . .16By Leigh Smith

THE FIRST INSIGHT INTO THE EUROPEAN COMMISSION’S PROPOSAL FOR A NEW EUROPEAN UNION DATA PROTECTION LAW . . . . . 19By Patrick van Eecke, Cameron Craig, and Jim Halpert

INTERNET LAW IN THE COURTS. . . . . . . . . . . . . . . . . 23By Evan Brown

INTERNET LAW

JOURNAL O F

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F e b r u a r y 2 0 1 2 J O U R N A L O F I N T E R N E T L A W

USING THE INTERNET TO YOUR COMPANY’S

ADVANTAGE IN DEFENDING AGAINST A WHISTLEBLOWER

ACTION By Michelle Sherman

The wide dissemination of news on the Internet through new-media sites, such as the Huffington Post , well-recognized blogs such as the Drudge Report , and social media sites such as Twitter is

changing how we get our news today. The Internet is also making it harder for anyone to be the first and original source of allegations of corporate malfeasance, which can be the basis for a whistleblower or false claims action. Therefore, a businesses that is defending itself against a whistleblower or qui tam (false claims) plain-tiff (collectively, “whistleblower”) should exhaustively search the Internet for evidence showing that the whis-tleblower is not the original source of the information.

SECTION 922 OF THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT

“Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act provides that

the Securities and Exchange Commission (SEC) shall pay awards to eligible whistleblowers who voluntarily provide the SEC with original information that leads to a successful enforcement action yielding monetary sanctions of over $1 million.” 1 Whistleblowers can recover between 10 and 30 percent of the total mon-etary sanctions collected in an SEC action or any related action, so there is a real financial incentive for a person to report suspected wrongdoing. Section 922 of Dodd-Frank also implemented Section 21F of the Securities Exchange Act of 1934, which reflects this and other incentives to whistleblowers.

According to the SEC’s May 25, 2011, press release, Section 922 defines original information as information that “must be based upon the whis-tleblower’s independent knowledge or independent analysis, not already known to the Commission and not derived exclusively from certain public sources” such as the news media.

Because the public policy behind the whistle-blower statute is to reward the reporting of alleged wrongdoing that may otherwise go undetected, the statute does not allow for bounty rewards to plaintiffs who are not the original source of the information. Thus, a whistleblower who provides information that is already known and discoverable through a blog post, Twitter, or other social network activity may have trouble satisfying an essential element for recov-ering the mandatory award under Section 922.

THE FALSE CLAIMS ACT AND THE PUBLIC DISCLOSURE BAR

Similarly, the re-enacted False Claims Act of 1986 includes a public disclosure bar providing that courts shall dismiss qui tam suits when the relevant information has already entered the public domain through certain channels, including the news media, unless the action is being brought by the U.S. Attorney General or by a person who is the original source of the information [31 U.S.C. § 3730(e)(4)(A)]. Section 3730(e)(4)(A) also allows the federal government to stop the dismissal of such an action by opposing the dismissal.

The public disclosure bar was added by Congress to the False Claims Act “in an effort to strike a balance between encouraging private persons to root out fraud and stifling parasitic lawsuits.” Recent amendments to the False Claims Act left unchanged the defense that

Michelle Sherman is special counsel at Sheppard Mullin Richter & Hampton, LLP.

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J O U R N A L O F I N T E R N E T L A W F e b r u a r y 2 0 1 2

information available in the news media cannot form the basis for a qui tam plaintiff being able to maintain his or her action, confirmed by the U.S. Supreme Court decision in Graham County Soil and Water Conservation District v. United States ex rel. Wilson . 2

WHY THE PUBLIC DISCLOSURE BAR SHOULD INCLUDE INTERNET ACTIVITY

With the exponential growth of the Internet, the meaning of news media has expanded to include blogs, online news, and social networking sites and thereby has created more opportunities for a company to assert the public disclosure bar. The definition of “news media” in Wikipedia highlights this broad scope:

The news media are those elements of the mass media that focus on delivering news to the general public or a target public. These include print media (newspapers, newsmaga-zines), broadcast news (radio and television), and more recently the Internet (online newspa-pers, news blogs, etc.) ” (emphasis added)

The New York Times has also reported how many stories are covered online today instead of through print editions:

Crucial to the Times’s approach in a time of less print space is City Room, the fourth most popular blog on NYTimes.com . It is where The Times dishes breaking news and a creative menu of features, columns and digital novel-ties. In City Room, a whole new kind of metro report emerges, with most of its 3,000 plus-blog posts a year never surfacing in print. 3

In Graham County, the Supreme Court specifi-cally cited the broad scope of the news media com-ponent of the public disclosure bar when the Court recognized that it includes “a large number of local newspapers and radio stations.” Clearly, online news sources, such as the Huffington Post , which AOL acquired for $315 million, and which had an esti-mated 25 million monthly users at the time of the sale, can have a far greater reach than a small-town local newspaper, which is included in the news media category of the public disclosure bar.

WikiLeaks is also a good example of confiden-tial information first being publicized through the Internet, ahead of an alleged whistleblower. A New York Times article describes how much WikiLeaks (and the use of the Internet to publicize confidential information) has changed the whole nature of whistle blowing:

Whistle-blowers in possession of valuable and perhaps incriminating corporate and govern-ment information now had a global dead drop on the Web. Traditional news organizations watched, first out of curiosity and then with competitive avidity, as WikiLeaks began to reveal classified government information that in some instances brought the lie to the official story. 4

CONCLUSION

A company that is defending itself against legal action by a whistleblower is well advised to search the Internet for discussions concerning allegations that form the basis of the whistleblower’s action. Industry-specific blog sites are a good starting point because they often contain gossip about companies in those particular industries. Twitter is also a good resource because it has the most real-time news updates and often breaks important news stories before the mainstream media does, as with reports of the 2011 earthquake and tsunami in Japan and their aftermath, the U.S. Navy Seals’ finding and killing Osama bin Laden (with a local resident tweeting in real-time the storming of Bin Laden’s compound), and the politi-cal upheaval in Egypt (which has been described as the “Twitter Revolution”). YouTube is another good resource, as evidenced by the video that quickly went viral in which University of California, Davis, campus police were seen pepper-spraying nonviolent students.

NOTES

1. U.S. Securities and Exchange Commission, Aug. 12, 2011, avail-able at http://www.sec.gov/spotlight/dodd-frank/whistleblower.shtml.

2. Graham County Soil and Water Conservation District v. United States ex rel. Wilson, 559 U.S. __, 130 S. Ct. 1396 (2010).

3. Arthur S. Brisbane, “Covering Its Own Backyard,” N.Y. Times, Oct. 23, 2011, at SR12.

4. David Carr, “Is This the WikiEnd?” N.Y Times , Nov. 6, 2011, at SR1.

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has broader implications. Statute of fraud requirements aside, writing and documents serve as tools of convey-ing contractual intentions. At the most basic level, a contract must be certain and complete to be enforce-able; the contents of the statements made by the trans-acting parties must be identifiable. The fulfillment of formal requirements seems to be of little value if it is unclear what obligations can actually be enforced. The mainstream approaches to the concepts of “writing” and “document” are best tested when confronted with Asynchronous JavaScript and XML (AJAX), a suite of technologies enabling Web pages to partially refresh the displayed content in real time. Admittedly, tying a legal argument to a specific technology may affect its general relevance and condemn it to oblivion once the technology in question declines in popularity. It must, however, be emphasized that AJAX symbolizes an irreversible shift in Web development. Even if the technologies represented by the acronym lose their significance or become obsolete, the World Wide Web will have permanently shifted to more interactive and dynamic interfaces. Accordingly, problems of recon-ceptualizing traditional legal concepts in light of such developments will persist.

On a broad level, this article questions the validity of the principles of nondiscrimination, func-tional equivalence, and media neutrality. On a more detailed level, it deconstructs two popular approaches to the concepts of “writing” and “documents.” One approach relates to the increasingly liberal (re)defini-tions of both concepts, while the other relates to the creation of “electronic equivalents” of “writing.” The latter underlies the regulatory efforts that produced the United Nations Commission on International Trade Law’s Model Law on Electronic Commerce (MLEC) of 1996 2 and the U.S. Uniform Electronic Transactions Act (UETA) of 1999, 3 among others. The wide interpretation of the terms “document” and “writing” must therefore be distinguished from the ability of a particular communication technology to fulfill the criteria of a functional equivalent. The point made in this article is simple: neither approach works. The discussion focuses on contract law as a testing ground for attempts at reformulating the concepts of “writing” and “document” but remains relevant to other areas of law.

The existing e-commerce laws were drafted in the infancy of the World Wide Web. The Web con-sisted of static hypertext markup language (HTML) files, and email was the technology du jour . With the evolution of the simple client-server architecture into a multitiered structure comprising databases as well as server- and client-side scripts, the Web is no longer just a tool for information retrieval. The modern Web provides new ways of presenting, organizing, and interacting with information. The technologies comprising the Web, however, remain misunder-stood and unexplored—at least from a contract law perspective. This translates into frequent misiden-tifications of legal problems and produces incorrect assumptions. Hiding behind the all-encompassing term “electronic,” legal analysis has failed to recog-nize the conceptual challenges resulting from the use of modern communication technologies in the transacting process. It is not the transmission in the form of electronic impulses that creates the need to rethink some traditional concepts. 4 The transmission of electronic impulses is “nothing more nor less than the transmission of electronic impulses.” 5 Preceding a noun or verb with “electronic” does not describe the problem and is of no analytical value. One must also be more discerning than referring to “electronic communications” in a general sense. The Internet enables a whole range of communication methods, all of which rely on electronic transmission but vary with regard to the manner of content presentation and the ability to interact in real time. 6 Each method creates different legal problems. When attempting to map the concepts of “writing” and “document” onto an environment made of interactive and interconnected files, the first step is to abandon the term “electronic” and shift the focus from the transmission of informa-tion to the manner of its presentation.

CONCEPTUAL AND TERMINOLOGICAL TURMOIL

Like most Internet law literature, the following discussion suffers from an unavoidable weakness: the difficulty of selecting the correct terms and of using them consistently. The interplay among “writing,” “document,” and “paper” is plagued by uncertainty. It is not always clear which term is appropriate and which words can be used interchangeably without prejudicing the outcome of the discussion. Is it

From Clay Tablets to AJAXContinued from page 1

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correct to talk about “pages” and “documents” in an environment characterized by an absence of tangible carriers? It is difficult not only to select the terminol-ogy, but also, to discern whether a given term consti-tutes a metaphor or whether it can be taken literally. A Web “page” is not really a page, just as a screen display is not actually a desktop. These are metaphors designed to facilitate human interaction with infor-mation systems. 7 Ultimately, the question is one of determining the legal effects of a statement. If a state-ment is made “in writing” or by a “written document,” it is logical to presume that its contents are relatively easy to discern. In the case of Web-based transactions, however, the very problem lies in not being able to do so. Contracts can be pieced together from multiple documents or can be a combination of written and oral communications. However, what is the document or the writing in an Internet-based transaction? These problems are more pertinent in transactions formed over the Web than by email. 8 The concepts of “writ-ing” and “document” are easier to apply to email, as the latter usually takes the form of a message coming from one source, whereas the content of nearly every Web page raises questions regarding its source and its exact scope. The question boils down to this: What is the information conveyed thereby?

WRITING AND FORMALITIES

“Writing” and “documents” are generally dis-cussed in the context of formalities. All e-commerce laws focus on removing obstacles to electronic con-tracting by enabling electronic messages to meet for-mal requirements. It is often forgotten, however, that contract law permits intention to be manifested in any manner—including electronic means of commu-nication. Generally, transactions need not be in writ-ing or be signed. Formal requirements are an excep-tion, not the rule. Nevertheless, it must be admitted that writing may constitute a component or premise of legal principles without being a formality. The parol evidence rule does not require a formal written document but rather “writing” in general. Similarly, when a contract is “reduced to writing,” it is presumed that the writing includes all the terms of the contract. There are also innumerable references to writing in statutes, such as those relating to providing specific information. 9 Writing may therefore be unrelated to any formal requirements.

STABILIZATION AND CONFINEMENT

Writing is difficult to separate from its traditional, tangible carrier: paper. 10 It is also difficult to disassoci-ate writing from a document. As paper ensures a min-imal degree of durability, traditional documents serve as evidence of a transaction. Durability, however, is not a legal requirement. Writing in pencil on a paper napkin can still be regarded as a written document. More importantly, however, tangible media not only preserve but also confine and stabilize the contents inscribed thereon. With paper, it is clear where the information ends and where it begins. Paper pages do not change while they are being read. Their con-tent remains the same (disregarding such issues as the deterioration of paper or the fading of ink). It is therefore an implicit assumption of “writing” (and the legal concepts that rely thereon) that the information conveyed thereby remains unchanged. Writing is by nature—if not by definition—stable. Stability must be distinguished from integrity. Integrity pertains to unauthorized alteration, the fact that the contents of a document have not been tampered with. Stability, however, has not attracted much debate as legal anal-ysis has focused on static files only. Although both concepts share a common denominator— retaining the contents as originally communicated—integrity carries undertones of authenticity, 11 whereas stabil-ity pertains to the constant nature of information. A Microsoft Word document may be edited with-out authorization. However, it is not programmed to change its content at periodic intervals or in response to the reader’s actions.

Theoretically, it is the content, not the form, that determines the legal effect of a statement. The form, however, determines the scope of the writ-ing and therefore the substance of the statement. Indirectly then, it may affect the legal consequences thereof. In practice, however, the terms “writing” and “document” are used interchangeably; seemingly, one cannot exist without the other. A document without writing is blank and of no legal significance. Writing without a document has an uncertain scope. The point is simple: information conveyed by “writing” has always been media-dependent. Writing conveys information; documents contain writing. Information requires spatial confinement; otherwise, it is difficult to tell which words must be taken into account when establishing the legal effect of a statement, if any.

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As for “records,” any transaction concluded by email or on the Web can be recorded by capturing the contents of the screen with a screenshot or pho-tograph. While the evidential value of such a record cannot be questioned, it is debatable whether it is synonymous with “writing” or a “document.” Records provide evidence of transactions, but they do not cre-ate them. 12 Records indicate the occurrence of certain events without necessarily implying their legal effects. The fixation of contractual statements is usually a question of evidence, not a premise of their validity or enforceability. The existence of “writing” must be regarded as a question of intention—at least from a contract law perspective. 13 Records must therefore be conceptually distinguished from both “writing” and “documents.” Creating a record of a transaction is not synonymous with putting it “in writing.”

ENTER: AJAX

Clay tablets require no explanation. It can be assumed that any information inscribed thereon is difficult to alter. As has been noted, “AJAX” stands for “asynchronous JavaScript and XML.” In the words of one author, “AJAX is easier to say than, I’ve been using client-side JavaScript, SOAP, and XML to obtain data directly from the server using XMLHTTP instead of the standard unload/reload cycle.” 14 The AJAX technology suite enables asyn-chronous interaction between Web servers and Web clients ( i.e., browsers), without the need to reload the entire page. 15 In laypersons’ terms and without further acronyms, AJAX permits a selective, real-time replacement of the information displayed on the screen in response to predetermined events. It cannot be overemphasized that, despite the naming conven-tion, Web pages are not actual pages but rather are interfaces—visual representations of code that enable the interaction with remote computer systems, which are usually composed of a Web server, an e-commerce server, and a database server. 16 This structure can be described as the back end of an e-commerce Web site. The front end is the Web site itself: the graphical user interface consisting of HTML 17 files hosted on the Web server. The user requests a Web page through his or her browser. What is returned and displayed on the screen is the product of the source file and input obtained from external sources, such as databases and/or code stored on the local client’s computer.

AJAX-based Web pages maintain continuous interac-tion between the Web client and the Web server, thus enabling real-time replacement of parts of the Web page. Thus, they share more similarities with DVD recordings of movies and ATM interfaces than with paper pages.

NONDISCRIMINATION, FUNCTIONAL EQUIVALENCE, AND TECHNOLOGY NEUTRALITY

Practically all e-commerce laws rely on the prin-ciples of nondiscrimination, functional equivalence, and technology neutrality. Each of these principles deserves a thorough examination—mainly because of the fact that, despite their importance, none of them seems fully conceptualized. This lack of clar-ity regarding their precise meaning sets incorrect points of departure and contributes to the existing state of uncertainty regarding both “writing” and “documents.”

The principle of nondiscrimination states that electronic messages cannot be denied legal effect or enforceability solely on the ground of their elec-tronic form. 18 The fact that a statement is set forth in an electronic message, as opposed to paper, should be irrelevant. The principle of nondiscrimination does not proclaim the validity or legal effect of any information contained in an electronic message. 19 It is also unrelated to the issue of whether a particular communication meets formal legal requirements. It only emphasizes that there should be no disparity of treatment between electronic messages and paper documents. One cannot help asking: Why not? After all, electronic messages—whether in the form of email or in the form of a Web site—are different from their paper-based equivalents. Seemingly, the whole purpose of e-commerce laws was to address these dif-ferences. It must be noted that the term “discrimina-tion” connotes not only the prejudicial treatment of different categories of things, but also, the recognition of differences between one thing and another. In this sense, the principle of nondiscrimination encourages an attitude of ignoring the dissimilarities between traditional and new methods of communication. It is one thing to state that an electronic format must not be a ground for denying the validity or legal effect of a statement. It is yet another to disregard the fact that Web pages, unlike paper pages, may selectively

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change their contents in response to user input. Again, a Web page is not like a paper page. It is easy to be misled by the terminological convention of call-ing the client-side, processed version of an HTML file a “page.”

The second cornerstone of e-commerce laws, functional equivalence, relies on the functions of traditional paper-based requirements and attempts to replicate them in an electronic environment. 20 Presumably, functional equivalence enables the application of existing laws “without necessitating the wholesale removal of the paper-based require-ments themselves or disturbing the legal concepts and approaches underlying those requirements.” 21 Functional equivalence provides criteria permitting electronic messages “to achieve the same level of legal recognition as corresponding paper documents.” 22 Once an electronic message fulfills these criteria, it is legally equivalent to the original concept. To illus-trate: If technology (or communication method) X can do (or is) x, y, z, then technology X is an equiva-lent of the paper-based concept and can perform some or all of its functions. Functional equivalence is predominantly discussed in relation to “writing” and “signatures” and aims to replicate these two concepts electronically. This approach creates two sets of prob-lems. First, a decision must be made regarding the legal constructs that need functional equivalents. Is there a need for a functional equivalent of “writing” or of a “document”? Interestingly, it has never been debated whether what is needed is an equivalent of “paper” or a “page.” The second source of difficulties relates to establishing the criteria that must be ful-filled for a technology (or communication method) to become a functional equivalent. Which criteria are vital? Which features need to be recreated? The ultimate purposes of this exercise must be kept in mind: enabling electronic transactions to function within the existing legal framework and facilitating the application of those legal principles that rely on the original concepts.

The third principle of e-commerce laws, “tech-nological neutrality,” refers to statutes that do not impose or promote any particular technology. 23 A different formulation of this principle states that laws should apply identically, irrespective of the technol-ogy used. Theoretically, technology neutrality is not about treating all technologies identically but instead is about ensuring that “only relevant differences

result in different treatment.” 24 In practice, however, technology neutrality seems to translate into an atti-tude of ignoring all differences between individual communication methods. Technology neutrality is often discussed alongside media neutrality, which relates to physical carriers only. 25 The two concepts are often difficult to distinguish. 26 It must be noted that if many legal principles implicitly presume the existence of paper as a physical carrier, it is dif-ficult to call them media neutral. As in the case of recognizing and addressing the differences between the world of paper and the world of hypertext files, it must be recognized that different media (or the absence thereof) raise different problems that may require different legal solutions; it is difficult to treat different things in the same way. Moreover, if many legal concepts are built around paper or paper-related concepts ( e.g., letters and mail), it can be questioned whether media neutrality is necessarily a feature of contract law. Why then, should it constitute a corner-stone of e-commerce regulations or serve as a point of departure for mapping traditional concepts onto new transacting scenarios?

DOCUMENTS

Even before the emergence of the Internet, the interpretation of “document” has been liberal. The term has been described as follows:

Any written thing capable of being evidence is properly described as a document and . . . it is immaterial on what the writing may be inscribed. It might be inscribed on paper, as is the common case now; but the common case once was that it was not on paper, but on parchment; and long before that it was on stone, marble or clay, and it might be, and often was, on metal. So I should desire to guard myself against being supposed to assent to the argument that a thing is not a document unless it be a paper writing. 27

Until Web sites and email entered the pic-ture, broad approaches focusing on tangibility were not prone to create any analytical difficulties. It is easy to state that it is immaterial what writing is inscribed on, if, at the same time, it is assumed that it is inscribed on something. Difficulties arise when

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liberal interpretations of the meaning of “document” are mapped onto scenarios involving interactive and interconnected Web pages. This is well illustrated by the case Victor Chandler International v. Customs & Excise Commissioner. 28 Notably, the case did not concern the contents of a document, but only the question: Is there a document? The court considered an offence under the Betting and Gaming Duties Act of 1981 of issuing, circulating, or distributing advertisements in documentary form. Advertisements had been placed on teletext, that is, they took the form of “screen frames” displayed on television that were accessed by typing the requested screen number. These screen frames” were generated on a remote, centralized system and could be updated as frequently as desired. The court held that construing the relevant section of the Betting and Gaming Duties Act as only applying to advertisements in documentary form took insufficient account of the technological advances that had taken place since its enactment. Accordingly, the section was construed to cover advertisements displayed via teletext. It was irrelevant that informa-tion contained in the “document” was required to be processed in some way. A “document” was held to include anything in which, or on which, information is recorded or stored. Given, however, that “informa-tion alone cannot constitute a document: only the physical object which contains information can,” 29 and that the notion of a “document” requires some permanence, the court held that the term “document” relates to the computers, the editing system, and the databases of the claimant; these pieces of hardware contain information. This ruling was based on the rule of statutory construction that an “ongoing” provision should be treated as “always speaking.” 30

Without going into a critique of construction techniques, associating the term “document” with computer hardware appears questionable. Technically, information is always connected with some physi-cal structure, even if only temporarily. It is always possible to “find the physical medium in which the data are embedded at a given point in time. But as a matter of practice, we look to the system, not the medium.” 31 Unfortunately, if information is associated with the system as a whole, rather than a single physi-cal subcomponent, there is no piece of the system that contains the “writing.” In other words, it is impossible to establish which writing is relevant. Driven to its extreme and transposed onto Internet transactions,

the approach taken in Victor Chandler regards a whole Web server as a document. This approach is further complicated by the interconnected nature of the hardware in Internet communications. After all, neither a Web server nor a database is a stand-alone system. The information contained “in” a Web server may interact with information from another Web server and from a database to produce output in the form of a Web page. What then, is the document? The Web page? All of the servers and the database? Or only the Web server hosting the original HTML file? Unquestionably, the contents of a database or a Web server can be delineated. However, if the database or the Web server is a document, then do all of its con-tents constitute “writing”?

Ultimately, the notion of a “document” requires not only that it contain information, but also, that this information be identifiable as pertaining to a specific transaction. The broader the concept of a “document,” that is, the more hardware that is taken into account and the larger the amount of informa-tion contained therein, the more difficult it is to establish which “ writing” is relevant when determin-ing the obligations of the parties or the existence of a contract. It must also be noted that in the Victor Chandler case, all content displayed on the screen came from one source, was archived for three months, and was easily printable. Transmitting material from one database to another was described as “the issue, circulation, or distribution” of a document. In adopt-ing such a flexible interpretation, the court assumed that the final “document,” that is, the screen frame on television, was an exact copy of the source “docu-ment” on the originating computer. 32 Despite the electronic character of the transmission, the informa-tion could be “reduced to written form” on receipt 33 and the sender was “creating a document on the recipient database.” 34 Needless to say and as discussed below, none of these assumptions can be made in the case of AJAX-based Web pages.

A similar, simplistic approach was adopted by the United Kingdom Law Commission, which briefly stated that information stored in electronic form con-stitutes a “document.” 35 A “document” was effectively equated with the medium that stores information. Again, the commission overlooked that, given the breadth of this approach, it is difficult to establish the exact scope of the information that must be taken into account. Interestingly, neither the MLEC nor

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the UETA define the concept separately but instead treat a “document” as a component of “writing.”

WRITING

“Writing” in Internet transactions is generally discussed in the context of formal requirements. The term is described in three different ways: one focus-ing on the ability to generate a tangible copy, one focusing on “availability for subsequent reference,” and one focusing on visibility. The U.S. Uniform Commercial Code [U.C.C. 1-201(46)] defines “writ-ing” as including “printing, typewriting, or any other intentional reduction to tangible form.” Although the “writing” requirement is easily satisfied by tele-graph, 36 telegram, 37 and telex, 38 it has always been associated with a paper document. 39 As a result, even in the case of modern methods of communication, the focus has remained on the ability to gener-ate a hard copy on the recipient’s side. 40 Although some courts have held that even without being printed, email messages may constitute “writing,” 41 the prevailing attitude is that electronic messages can meet the “writing” requirement only if they can be retained or reduced to a “written form.” 42 The circularity of reasoning is immediately apparent: A message can be regarded as “writing” if it can be “reduced to writing.” Such reasoning also illustrates the difficulties of establishing a precise vocabulary when addressing concepts that have always been perceived in an intuitive manner and that could be used interchangeably without affecting the outcome of the argument.

It is also interesting to note that one of the most frequently encountered formal requirements, con-tained in U.C.C. Section 2-201(1), requires “some writing” sufficient to indicate the conclusion of a contract for the sale of goods for the price of $500 or more. This provision focuses on the existence, not on the contents, of a contract. The requirements are therefore quite minimal—the “writing” must only indicate that a contract has been formed and need not describe all its terms. The problem of determin-ing the information conveyed by such “writing” does not arise. Presenting the issue in the form of a simple “yes/no” question regarding the existence of “writ-ing” simplifies legal analysis but avoids confronting the difficult task of establishing the exact terms of a transaction.

The MLEC approaches “writing” from a different angle. Article 6(1) states: “Where the law requires information to be in writing, that requirement is met by a data message if the information contained therein is accessible so as to be usable for subsequent reference.” 43 The provision sets the basic standard for a data message “to meet a requirement that informa-tion be retained or presented ‘in writing’ (or that the information be contained in a ‘document’ or other paper-based instrument).” 44 The MLEC invariably associates “writing” with “document” and, at the same time, ties a “document” to paper. A similar conflation of “writing” and “document” occurs in the MLEC explanatory notes about the functions performed by “writing” in a paper-based environment. These include, among other things, the provision of tangible evidence of the intent of the parties, the provision of a document legible by all, and the provision of a document that would remain unaltered over time and provide a permanent record of a transaction. 45 Given that all of these functions supposedly relate to “writ-ing,” the emphasis on different aspects of tangibility is surprising. Moreover, according to the explanatory notes, the same functions that are fulfilled by “writ-ing” are also fulfilled by paper documents. 46 In other words, the MLEC treats “writing” and a “document” as if they were one concept that can be referred to interchangeably. The term “document” is not defined or discussed separately. Article 6 effectively creates the functional equivalent of “writing.” Its sole pre-requisite, “accessibility for subsequent reference,” is preferred over “durability” or “non-alterability,” which—according to the explanatory notes—would have established standards that were too harsh, as well as over “readability” or “intelligibility,” which were considered too subjective.

It was also pointed out in the MLEC that “acces-sibility” might require the retention of the software necessary to render information readable. 47 Although the issue is not discussed in the explanatory notes or any literature accompanying the MLEC, it is logical to assume that “accessibility for subsequent reference” requires that the “subsequent reference” provide the same content as was originally viewed. In a case in which this assumption cannot be made, the commu-nication method in question cannot be considered a functional equivalent of writing. It is also logical to assume that to ensure “subsequent reference,” some form of storage is required. At the same time, given

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the absence of any temporal indicators, it appears that even transient storage would suffice and that the functional equivalent of “writing” need only remain accessible for a brief period of time.

The UETA introduces an interesting variation on the wording of the MLEC. For an electronic com-munication to be in “writing,” UETA prescribes that it 48 be “capable of retention by the recipient at the time of receipt.” 49 The relevant provision stresses that an electronic record cannot be retained if the sender inhibits the recipient’s ability to print or store the record. 50 The recipient must be able to read the electronic record and “must have the ability to get back to the information in some way at a later date.” 51 The UETA supplements “accessibility for subsequent reference” with an explicit requirement that the information be capable of retention and reproduc-tion. This approach effectively prohibits the use of any technology that renders it difficult to capture and store the contents of a Web page as displayed during a transaction. Again, an implicit assumption of this provision is that the stored “writing” conveys the same information as was originally displayed when the transaction took place.

Yet another approach to “writing” has been pre-sented by the UK Law Commission in its advice on meeting formal requirements in e-commerce transac-tions. Relying on the same premises as the MLEC, the Commission proclaimed the equality of treatment for paper documents and electronic forms of com-munication. The functional equivalence approach has lead to the belief that, in most contexts, “e-mails (and attachments) and website trading (but not EDI) are already capable of satisfying statutory form requirements existing in English law.” 52 This con-clusion was based on the definition of “writing” in the Interpretations Act of 1978 and on the func-tions of “writing” described in the MLEC. The Interpretations Act defines “writing” as including “typing, printing, lithography, photography and other modes of representing or reproducing words in visible form.” According to the Commission, “writing” must involve text perceivable to the human eye. Despite the fact that in the absence of a computer screen the text is imperceptible, the Commission believed that both email and Web-site transactions fall within the natural meaning of writing as they fit within the category of “other modes of representing or reproduc-ing words in a visible form.” 53 It must be noted that

this definition contains an unintended discrepancy: A “representation” can be temporary and transient, whereas the term “reproduction” implies a minimal degree of permanence. Given that the definition uses the terms in the alternative, the premises of “writ-ing” are in fact minimal, and representation suffices. Presumably, transient or temporary representations of text historically were rare or even nonexistent. Thus, the problem inherent in the Commission’s definition would rarely, if ever, arise. Can writing be transient? How long does text have to remain “represented” for it to constitute “writing”? If both questions are approached in a liberal manner, that is, writing can be transient and only a minimal amount of time on display suffices for text to constitute “writing,” the next question is only rhetorical in nature. How does one apply legal principles that inherently—but not explicitly—presume that writing is stable and constant? Oblivious to these problems, the UK Law Commission equates writing with any visible repre-sentation of text. Responding to the view that writing requires some “physical memorial,” the Commission stated that the creation of a tangible form is only one of the functions of paper-based writing. In practice, “both parties will usually be able to store and to print a copy of an electronic communication.” 54

Another issue arises at this point. The Commission apparently assumes that not only is it possible to make a copy of writing, but also that such a copy conveys the same content on the side of the addressee as on the side of the sender. This assumption cannot, however, be made in Web-based transactions as the sender’s side and the recipient’s side of “writing” is, by definition, different. On the sender’s side, that is, the “writing” hosted on the Web server, looks differ-ent from the “writing” displayed on the recipient’s computer screen. (Skeptical readers are invited to select the View Source option in their browser menus to see an original source file on the Web-server side and compare it to the Web page on display.) The Commission also underestimated the difficulty of storing and/or printing an electronic communication in its entirety, and as originally viewed.

PUTTING IT ALL TOGETHER

An interesting picture emerges once all of the aforementioned approaches to a “document” and to “writing” are combined and confronted with the

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technological reality of Internet-based transactions. The first observation that comes to mind is that the two terms, which are frequently used interchangeably, can also be more remote conceptually than might be expected. Given the inconsistent terminology and the case-specific observations, it is difficult to draw final conclusions or propose a logically cohesive legal solution. It is, however, possible to make some general observations.

The term “document” is approached in two different ways. It is either regarded as a component of “writing” or as a stand-alone concept. The for-mer approach invariably associates “writing” with tangibility and is difficult to apply in scenarios in which such tangibility is absent. Unfortunately, this approach seems to underpin e-commerce laws and the principle of functional equivalence, which—despite its very purpose of providing electronic equivalents to paper-based concepts—cannot detach itself concep-tually from paper. An electronic file is not the same as a paper document. It has different characteristics, which must be taken into account in translating traditional legal constructs into the new transacting environment.

The second approach is exemplified by Victor Chandler. Despite frequent references to this case in Internet literature, its limitations must be recognized. First, as discussed above, the association of a “docu-ment” with storage and hardware leads to a dead end as it renders difficult the delineation of the exact scope of the information relevant to a transaction. It can hardly be assumed that all the content of a data-base or Web server must be taken into account. The “hardware/storage” approach may answer the simple question, Is there a document?; however, it otherwise has no analytical value as it is incapable of pointing to the relevant “writing.” The contours of a document must be clear so as to establish which words describe the obligations of the parties. Second, Victor Chandler focused exclusively on the existence of a “docu-ment”—not on the use of the term in conjunction with writing. The case was decided after the Internet became a mainstream phenomenon. Although the judges who heard this case demonstrated a good grasp of the technologies involved in the dissemination of teletext, there was no discussion of the client-server architecture, which underpins practically all Internet-based methods of communication. When a “document” is stored on a server or when a server is

the document, it remains invisible to the addressee of the statement contained therein. From a contract law perspective, the server and anything stored thereon is irrelevant. According to contract theory, every state-ment (including one made in writing) is evaluated exclusively from the perspective of the addressee. Thus, only the client side of the transaction matters. Even if the Web server or the XHTML file contained thereon are “documents,” only the version of such a “document” that is displayed to the addressee is legally relevant. This, however, points to the screen as being the document. Assuming that from a transac-tional perspective, the information contained in the document matters more than the document itself, the analysis ultimately should shift to the content of the screen and to establishing exactly what part of that content constitutes the relevant writing. While the screen constitutes a smaller and more manageable unit of analysis than the whole Web server, it too has problems, such as discerning which elements dis-played thereon should be included in the analysis and establishing whether information contained behind hyperlinks forms part of a statement.

Approaches to “writing” range from the require-ment that an electronic message be capable of reduc-tion to a tangible form to mere visibility. Depending on the approach, either every Web page or only static Web sites that can be stored or printed constitute writing. Theoretically, a Web page remains visible until it is closed or a different Web page is loaded in the browser window; as long as a Web page is displayed on the screen, it is writing. The problem becomes more complex, however, once the explicit assumption is made that the information conveyed by the writing remains the same. While one can still speak of visibility, AJAX-based Web pages bear more resemblance to recordings of movies than to the clas-sic concept of writing. Visibility notwithstanding, can there be “writing” if the content of a Web page changes in front of the addressee’s eyes?

More complications arise when “accessibility for subsequent reference” and “storage” are added to the lists of prerequisites for “writing.” Web servers are, by definition, designed to store and maintain Web pages for subsequent reference. However, given the dynamic nature of the Web, a subsequent reference may not display a Web page in the same form as it was originally viewed. Each subsequent reference may display different content. Moreover, capturing

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the content viewed during a transaction on the user’s side may be difficult. Different methods of saving Web pages preserve different content. The retention of applications, which generate the contents of Web pages, is not only technically complex, but it also may not guarantee the return of the exact contents viewed at an earlier time. AJAX-based Web pages are particularly difficult to store. Although “difficult” does not mean “impossible,” it must be noted that, currently, there is no widely available mainstream application capable of storing the entirety of code and content that makes up an AJAX-based Web page. In fact, AJAX is renowned for “breaking the Back button,” that is, making it impossible for a user to return to the previous page (or the same version of the page) by means of the Back button in the browser. Moreover, AJAX pages, unlike more traditional Web pages, cannot be bookmarked. In other words, the content that was originally displayed is difficult to retrieve later and recreate in its entirety. Regarding the criterion of “reduction to tangible form,” there admittedly is no practical difficulty in making a print-out of a Web page, even an AJAX-based Web page. The complete contents of a Web page, however, may not appear on a printout. In sum, all approaches falter when it is taken into account that the contents of dynamic Web pages are difficult to store and recreate at a future time.

INTERIM CONCLUSIONS

Legal concepts that originally developed based on paper documents are not easily transposed onto the current transactional environment made up of interactive and dynamic files. The problems inherent in recreating “writing” and “documents” in such an environment extend beyond the simple questions, Is there writing? and Is there a document? It is point-less to give a positive answer to either question if the contents conveyed by such “writing” or “document” cannot be established. Liberal interpretations provide little certainty. The traditional concepts of writing and documents require more than a slight repackag-ing to work in this new environment. The essence of writing cannot be captured in such simplistic terms as “storage,” “accessibility for subsequent reference,” or “visibility.” Current regulatory approaches, such as those represented by the MLEC and the UETA, work well with PDF files, Microsoft Word documents,

and—to an extent—static HTML. They cannot, however, accommodate the dynamic Web. Moreover, even if the requirements of “writing” can be fulfilled by many Web pages or other forms of electronic communication, it must be established whether such forms of “writing” enable the application of the prin-ciples that are built around the original concept. Do they trigger the application of the parol evidence rule? If so, what are the four corners of each of these “documents”? How can the doctrine of integration be applied?

The unforeseen side effect of the e-commerce laws is the indirect prohibition of AJAX, or any technology that does not permit “accessibility for subsequent reference” and/or storage. It cannot be expected, however, that Web developers and the commercial community will take a step back to accommodate existing e-commerce laws and abandon the use of AJAX-based Web pages or the dynamic, interactive Web in general. As technology is not likely to respond to the law, it is the law that will have to respond to technology. The type of legal response required must be preceded by extensive empirical research that is beyond the scope of this article.

The present state of legal analysis and regulatory approaches to Internet-based transactions is charac-terized by a collective inability to detach ourselves from familiar, paper-based concepts and a persistent indifference to the technologies involved in the transacting process. Both characteristics may well be a result of the incorrect assumptions underpin-ning the principles of nondiscrimination, functional equivalence, and media (and technology) neutrality. Taken together, these three principles provide incor-rect points of departure and lead legal analysis to a dead end. The correct point of departure is obvious: It must be acknowledged that it does, in fact, make a difference whether information is set forth in an email, on a Web page, or on paper.

In the future, legal analysis must become more technology sensitive and must be based on correct technical assumptions. Judges and legislators alike must understand the new communication technolo-gies involved in e-commerce. The focus must be taken off electronic transmission and placed instead on the novel ways of presenting and interacting with information. Instead of continuing to compare Internet-based methods of communication to the world of paper, the differences between the two must

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be recognized and addressed. While this article has posed more questions than it has provided answers, it also suggests a solution. “Writing” in conjunction with a “document” encapsulates certain informa-tion. It is this encapsulation that must be re-created so as to be able to apply those legal concepts that historically rely on—or presume—the existence of paper. Without such encapsulation, any attempts to create the functional equivalents of “writing” or any redefinitions of “document” are pointless. Instead of attempts to create functional equivalents of “writing,” what is needed is a functional equivalent of paper. After all, most functions of writing cannot be fulfilled without it. Certainty as to the scope of writing must be regarded as a prerequisite to the certainty of elec-tronic commerce transactions.

NOTES

1. A. H. Boss, “Searching for Security in the Law of Electronic Commerce,” 23 Nova L. Rev. 585 (1999); Charles N. Faerber, “Book Versus Byte: The Prospects and Desirability of a Paperless Society,” 17 J. Marshall J. Computer & Info. L . 797 (1999); D. L. Kidd Jr & W. H. Daughtrey Jr, “Adapting Contract Law to Accommodate Electronic Contracts: Overview and Suggestions,” 26 Rutgers Computer & Tech L. J. 216 (2000); L. Bennett Moses, “Recurring Dilemmas: The Law’s Race to Keep up with Technological Change,” U. Ill. J.L. Tech. & Pol’y 248 (2007).

2. Available at http:// www.uncitral.org/uncitral/en/uncitral_texts/electronic_commerce/1996Model.html ; see also the UNCITRAL Convention on the Use of Electronic Communications in International Contracts, which largely repeats the provisions of the MLEC regarding “writing.”

3. Approved by the National Conference of Commissioners on Uniform State Laws in 1999.

4. Chris Reed, “Online and Offline Equivalence: Aspiration and Achievement,” 18 I.J.L. & I.T. 3, 258 (2010).

5. Victor Chandler International v. Customs & Excise Commissioner 1 W.L.R. 1309 (2000).

6. See also , M. A. Geist, “The Reality of Bytes: Regulating Economic Activity in the Age of the Internet,” 73 Wash. L. Rev. 525 (1998).

7. J. H. Blavin & I.G. Cohen , “ Gore, Gibson and Goldsmith: The Evolution of Internet Metaphors in Law and Commentary” 16 Harv. J. L. & Tech. 265 (2002).

8. Henry H Perritt, Jr., “Digital Communications Law” 906 (Aspen Publishers 2010).

9. See, e.g., the Unfair Contract Terms Act, 1977 §3 (Eng.), which refers to “written” standard terms of business.

10. M. Hildebrandt, “A Vision of Ambient Law” in “Regulating Technologies” 180 (R. Brownsword & K. Yeung eds., Hart Publishing 2008).

11. See, e.g,. MLEC art. 8, which ties “integrity” to “original” and requires a “reliable assurance as to the integrity of the information from the time when it was first generated in its final form.” See generally , W. Ford & M. S. Baum, “Secure Electronic Commerce: Building the Infrastructure for Digital Signatures and Encryption” 113 (Prentice Hall 2001).

12. J. Sommer, “Against Cyberlaw,” 15 Berkeley Tech. L. J. 1165 (2000).

13. D. W. McLauchlan, “Parol Evidence and Contract Formation,” 121 L.Q.R. 11 (2005).

14. E. Woychowsky, “AJAX: Creating Web Pages with Asynchronous JavaScript and XML” para. 2.2.1 (Prentice Hall 2006).

15. J. J. Garrett, “AJAX: A New Approach to Web Applications,” 2005 , http://adaptivepath.com/ideas/ajax-new-approach-web-applications;see also A T. Holdener III, “AJAX: The Definitive Guide” para. 1.1.3 (O’Reilly Media, Inc. 2008).

16. For a more detailed description of e-commerce architectures see G. P. Schneider & J. T. Perry, “Electronic Commerce” 64, 65 (Cambridge 2001).

17. HTML is currently in version 4.1. A related technology is XHTML. At present, HTML is being revised to introduce more interactivity and better multimedia support to become HTML5.

18. Model Law on Electronic Commerce (MLEC), art. 5, 1996 U.N. CITL; The Convention on the Use of Electronic Communications in International Contracts (CUECIC), art. 8, 2005 U.N.CITL; Uniform Electronic Transactions Act (UETA), sec. 7, U.S.C. (1999).

19. Thomas J. Smedinghoff, “The Legal Challenges of Implementing Electronic Transactions: Can this Transaction Be Done in Electronic Form?” 41 UCC Law J. 3, para. 1.2 (2008).

20. MLEC Explanatory Note 16.

21. CUECIC Explanatory Note 52.

22. MLEC Explanatory Note 18; see also UETA Prefatory Note.

23. CUECIC Explanatory Note 47.

24. B.J. Koops, “Should ICT Regulation be Technology-Neutral?” in “Starting Points for ICT Regulation. Deconstructing Prevalent Policy One-Liners” 77–108, at 271 (B.-J. Koops, M. Lips, C. Prins & M. Schellekens eds., IT & Law Series No. 9, The Hague: T.M.C. Asser Press 2006).


26. Chris Reed, “Online and Offline Equivalence: Aspiration and Achievement,” 18 I.J.L. & I.T. 3, 248–273 (2010).

27. R. v. Daye [1908] 2 K.B. 333, per Darling J.

28. Victor Chandler supra, note 5.

29. Id. at 1308.

30. F Bennion, “Bennion’s Statutory Interpretations” 288, 686 (3rd ed., Butterworths 1997).

31. Sommer, supra note 12, at 1170

32. Victor Chandler, supra note 5, at 1310,

33. Victor Chandler, supra note 5, at 1309.

34. Victor Chandler, supra note 5, at 1309.

35. UK Law Commission, Electronic Commerce: Formal Requirements in Commercial Transactions, 2001, para. 3.41.

36. Howley v. Whipple, 48 N.H. 487, 488 (1869).

37. Selma Savings Bank v. Webster County Bank.206 S.W. 870 (Ky. Ct. App. 1918).

38. Hideca Petroleum Corp. v. Tampimex Oil Int’l, Ltd., 740 S.W.2d 838 (Tex. Ct. App. 1987); Al Ferro Commodities Corp. v. Tube City Iron & Metal Co., 914 F.2d 241 (3d Cir. 1994).

39. G. B. Delta & J. H. Matsuura, “Law of the Internet” para. 13-38 (3rd ed., Aspen Publishers 2001).

40. Id., 13-39, 13-40; 13-61 [E], 13-62.

41. Shattuck v. Klotzback, 14 Mass. L. Rptr. 360, 2001 WL 1839720 (Mass. Super. Ct. 2001); see also Id., 13-04, 13-40–13-43; 13.52–13.53, for a review of cases in which email was held to be “writing.”

42. Delta & Matsuurapara, supra note 39, at 13-62.

43. This wording is repeated by CUECIC art. 9.2.


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48. Although UETA refers to “records,” not “electronic message” or “communication”, it must be assumed that given the defini-tion of “record” ( i.e., “all means of communicating or storing information”), the term encompasses messages used to form a transaction; see UETA § 8(a). UETA § 2(7), (13) and Comment 10 thereto.

49. UETA § 8(a).

50. UETA § 8(a)(c).

51. UETA § 8(a), Comment 3.

52. UK Law Commission, supra note 35, at para. 2.15.

53. Id., paras. 3.8, 3.18; for a contrary view in the UK see Department of Trade and Industry, Building Confidence in Electronic Commerce, 1999, U.R.N. 99/642, 10 para. 16.

54. UK Law Commission , supra, note 35, at para. 3.18; see also Hall v. Cognos Ltd. Hull Industrial Tribunal Case No. 1803325/97 (1997), in which the printed versions of the e-mail messages constituted writings and the names on the bottom were signatures.

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THE EUROPEAN COMMISSION’S DRAFT COMMON EUROPEAN

SALES LAW By Leigh Smith

Following the European Parliament’s backing in June 2011 of the policy proposal put forward by European Commission Vice-President Viviane Reding, the European Commission has itself now

formally proposed an optional contract law regime for all of European Union (EU) in the form of a Draft Regulation on a Common European Sales Law. The Draft Regulation is intended to break down trade barri-ers within the EU and stimulate European e-commerce by offering a single set of rules for cross-border con-tracts in all 27 EU countries.

BACKGROUND

The Commission formally initiated the debate as to whether harmonization of European contract law was desirable around 10 years ago. 1 Following initial comments from stakeholders, an Action Plan was published in 2003, 2 which led to a Common Frame of Reference to guide the debate towards developing a workable proposal.

On 1 July 2010, the Commission published a Green Paper on European contract law 3 setting forth possible practical and legislative actions designed to bring more coherence to contract law across the EU. The Green Paper considered what should be the legal nature of any instrument of European contract law and set forth options ranging from a non-binding

instrument or official “toolbox” for national legisla-tors designed to improve the consistency and quality of national legislation, to a binding instrument that would set forth an alternative to the existing plural-ity of national contract law regimes by providing a single set of contract rules. The Commission favored the introduction of the latter, the so-called 28th regime, based specifically on a regulation setting up an optional instrument of European contract law.

On 8 June 2011, the European Parliament voted in favor of adopting an optional contract law for all EU businesses and consumers. The vote followed a feasibility study 4 carried out by a Commission Expert Group on establishing a new contract law.

THE DRAFT COMMON EUROPEAN SALES LAW

The Commission’s Draft Regulation on a Common European Sales Law (CESL) was pub-lished on 11 October 2011. 5 The Commission’s Draft Regulation creates a new contractual regime that the parties to a contract could agree to apply instead of national law. This would be an option in business-to-consumer contracts, as well as business-to-business contracts when at least one party falls within the definition in CESL Article 7 of a “Small or Medium Enterprise” (SME), for the sale of goods, as well as for digital content contracts, such as music, movies, software and smartphone applications. The regime would apply to cross-border contracts only; however, Member States would have the choice to make the regime applicable to purely domestic contracts as well.

The choice of applying the CESL would require an explicit agreement of the parties to that effect. In business-to-consumer contracts, the choice would be valid only if the consumer’s consent is given by an explicit statement separate from the statement indi-cating the agreement to conclude a contract. Annex II of the Draft Regulation contains a “Standard Information Notice” on the CESL, which must be provided by the business to the consumer before an agreement to apply the CESL is made.

The CESL itself is found in Annex I of the Draft Regulation and sets forth a common set of rules to apply to the “life cycle” of a contract. Part I of the Annex sets forth the general principles of the CESL. These include the freedom to derogate from the

Leigh Smith is an associate at the law firm McDermott Will & Emery in London, England. His practice focuses on intellectual property and commercial law.

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CESL unless otherwise stated in the CESL (Article 1) and the duty to act in accordance with good faith and fair dealing (Article 2). “Good faith and fair dealing” are defined in Article 2 of the Draft Regulation as “a standard of conduct characterised by honesty, open-ness and consideration for the interests of the other party to the transaction or relationship in question.” Crucially, according to CESL Article 4, the CESL is to be “interpreted autonomously and in accordance with its objectives and the principles underlying it.”

Part II concerns pre-contractual information and rules on how agreements are concluded between two parties. As well as standard information for business-to-consumer distance and off-premises contracts, for example, in business-to-business contracts, the supplier must disclose to the other business any information concerning “the main characteristics of the goods, digital content or related services to be supplied which the supplier has or can be expected to have and which it would be contrary to good faith and fair dealing not to disclose to the other party.” Part II also contains specific provisions that give consumers a right to withdraw from distance and off-premises contracts. The Draft Regulation contains a “model instruction on withdrawal” that must be provided by the business to the consumer before a distance or an off-premises contract is concluded. It also includes a “model withdrawal form.” Finally, it includes provisions for avoidance of contracts result-ing from mistake, fraud, threat, or unfair exploitation.

Part III contains general provisions for the inter-pretation of contract terms. Article 58, for example, states that a contract is to be interpreted according to “the common intention of the parties even if this differs from the normal meaning of the expressions used in it.” It also provides that “where one party intended an expression used in the contract to have a particular meaning, and at the time of the conclusion of the contract the other party was aware, or could be expected to have been aware, of that intention, the expression is to be interpreted in the way intended by the first party.” Moreover, in interpreting a contract, regard may be given, amongst other things, to the cir-cumstances in which it was concluded, “including the preliminary negotiations,” as well as the general con-cepts of good faith and fair dealing detailed in Part I.

Part III also contains rules about when a contract term may be considered unfair and therefore invalid. Certain terms will always be unfair, for example, those

that exclude or limit the liability of a business for any loss or damage to the consumer caused deliberately or as a result of gross negligence. Article 85 also contains a list of purposes or effects of contractual terms that will be “presumed” to be unfair in the context of a business-to-consumer contract. These terms include those that intend to “inappropriately exclude or limit the remedies available to the consumer against the trader”; or “enable a trader to alter unilaterally with-out a valid reason any characteristics of the goods.”

The Draft Regulation also sets forth the respec-tive rights and obligations of parties to a sales contract and any related services contract, along with remedies for non-performance, interest on late payments, and obligations upon termination.

COMMENTS

The Draft Regulation and the process of develop-ing a proposal for what could be a step towards a har-monized law of contract for the EU have predictably met with considerable hesitance. Not only has criti-cism been leveled at the contents of the CESL and the Commission’s decision to introduce the CESL by way of a binding legal instrument, but also, inter-ested parties have gone so far as to question whether the Commission has the authority to even consider such a regime. One such example is a UK Ministry of Justice paper published on 10 February 2011, 6 in which the United Kingdom in principle rejected all of the Commission’s proposals for addressing the lack of a harmonized contract law, other than perhaps a voluntary “toolbox” for national legislators, on the basis that they are inappropriate and unnecessary, and as such give rise to “serious doubts about the EU’s competence under the Treaty to pursue any of them.”

According to the Commission, adoption of the CESL will assist businesses as they would no longer need to wrestle with multiple contract law sys-tems when conducting cross-border trade. The CESL would also cut transaction costs and help SMEs to expand into new markets. In relation to business-to-consumer contracts, a comparison can be drawn with the present regime as enacted by the Rome I Regulation. 7 Under Rome I, a business must com-ply with the consumer protection rules of another Member State when that business can be said to be targeting customers in that other Member State. This creates a degree of legal uncertainty as to when

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a business can be said to be targeting customers in another country, and it also discourages online busi-nesses from engaging in cross-border trade because the costs of complying with each Member State’s consumer protection regime outweighs the benefits of the extra business.

In contrast, a business adopting the CESL would be able to actively pursue consumers from across the European Union while avoiding the need to comply with 27 diverging consumer protection regimes. It would also, the Commission suggests, ensure bet-ter consumer protection across all Member States because consumers would be able to rely on the CESL as a mark of quality. The option of one harmonized regime provides certainty for both parties of business-to-business and business-to-consumer contracts.

The Law Commission, an independent statutory body established to advise the UK Government on legal reform, in its analysis of the Draft Regulation, 8 highlighted several issues with the 28th regime, or, as the Law Commission prefers to call it, the 29th regime, to encompass Scots Law. The Law Commission noted that businesses adopting the CESL would be unlikely to make it optional, and therefore consumers would be faced with a choice to either accept the CESL or not enter into a contract. Given that the CESL takes precedence over the mandatory rules of national law, a consumer accepting the CESL might in fact receive a lower level of consumer protection.

From a substantive perspective, the concepts of good faith and fair dealing defy accurate interpreta-tion, and certain principles of the CESL, such as those on the interpretation of contract terms, run contrary to English Law. It is not surprising that the Law Society of England and Wales has expressed con-cerns that the adoption of such a law could actually lead to more uncertainty for businesses and consum-ers. Law Society President John Wotton has said:

From a practical perspective, an “optional instrument” of contract law would have no underlying jurisprudence and practitioners are concerned that this would lead to uncertainty for businesses and consumers as to how it would be interpreted and applied. Even once such a body of case-law had been developed (requiring

much litigation on the part of private parties), it would be difficult to ensure the uniform application of the new system across the 27 EU Member States with their different legal cultures. 9

Such criticism is symptomatic of the wider criti-cism that has been leveled at the CESL. As suggested by the Law Commission, the CESL would perhaps benefit from being focused more on distance sales. Perhaps it would even be appropriate to limit this to distance sales that are business-to-consumer in nature. A more tailored, mandatory set of contract terms for cross-border consumer contracts would stimulate cross-border trade and create the quality standard that the Commission has sought to establish with the CESL without the disadvantages associated with a one-size-fits-all approach.

The Commission’s proposal now needs approval from EU Member States and from the European Parliament. As the criticism of the Draft Regulation suggests, support is not, however, likely to be forth-coming from all Member States.

NOTES

1. “Communication from the European Commission to the Council and the European Parliament on European Contract Law,” COM (2001) 398 final (Nov. 7, 2001).

2. “Communication from the European Commission to the Council and the European Parliament: A More Coherent European Contract Law, An Action Plan,” COM (2003) 68 final (Dec. 2, 2003).

3. “Green Paper from the European Commission on Policy Options for Progress Towards a European Contract Law for Consumers and Businesses,” COM (2010) 348 final (Jan. 7, 2010).

4. Available at http://ec.europa.eu/justice/contract/files/feasibility_study_final.pdf.

5. “Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law,” COM (2011) 635 final (Nov. 10, 2011).

6. Available at http://www.justice.gov.uk/consultations/docs/eu-contract-law-call-for-evidence-response.pdf.

7. Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, 2008 O.J. (L 177) 6.

8. Available at http://www.justice.gov.uk/lawcommission/docs/Common_European_Sales_Law_Advice.pdf.

9. Press Release, The Law Society of England and Wales, Cross-Border Contract Proposals: Society Raises Practical Concerns (Oct.12, 2011), available at http://www.lawsociety.org.uk/newsandevents/news/view=newsarticle.law?NEWSID=443418.

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THE FIRST INSIGHT INTO THE EUROPEAN

COMMISSION’S PROPOSAL FOR A NEW

EUROPEAN UNION DATA PROTECTION LAW By Patrick van Eecke, Cameron Craig, and Jim Halpert

On December 6, 2011,Viviane Reding, European Commission Vice-President and commissioner responsible for justice, fundamental rights, and citizenship, announced the long-awaited Proposal

for a New Data Protection Regulation. 1 The Proposal has now entered into interservice consultation with other Commission Directorates-General, after which the text will be considered by the European Parliament and the European Council, which may make signifi-cant changes. The Regulation would repeal the current Data Protection Directive 95/46/EC. It is expected to become law in two to three years.

THE NEW DATA PROTECTION DRAFT REGULATION

The authors had the opportunity to take a first glance at the Draft Regulation before it was

leaked on various Internet blogs last week. The Draft Regulation contains significant changes to the existing law that business communities in the European Union (EU) would need to understand and prepare to adapt to. In some ways, the new law should make compliance more achievable by reduc-ing bureaucratic filing requirements and authoriza-tions. However, businesses would have to take addi-tional steps to demonstrate compliance, variations in Member States’ interpretations of the new Data Protection Regulation would have to be harmonized in ways that expand the rights of data subjects signifi-cantly, and the possible penalties for noncompliance would become much more severe than is currently the case.

Other features of the new Data Protection Regulation would include the following:

• Consent would need to be explicit, involving some affirmative action by the data subject, and implied consent relying on inaction by the data subject would no longer be valid.

• Employee consent, which is currently valid in a number of EU member states, would no longer be a valid ground for processing personal data.

• As consent is often used as the ground for com-plying with non-EU legal requirements that involve the use and disclosure of employee per-sonal data, compliance is likely to become much more difficult for employers.

• Direct marketing and behavioral advertising, which currently occur in a significant minor-ity of Member States on an implicit consent basis, would likely require some form of explicit consent.

• Data minimization requirements in current law would be expanded and would need to be incor-porated into internal audits and privacy-by-design solutions.

The remainder of this article discusses what we see as the most significant changes to be expected in the data protection landscape.

A REGULATION INSTEAD OF A DIRECTIVE

As had been widely speculated, the European Commission has chosen to implement the new

The authors are all partners in DLA Piper, a global business law firm. Patrick van Eecke works in the Brussels office, Cameron Craig works in the Sheffield, England, office, and Jim Halpert works in the Washington, DC office.

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rules through a regulation rather than a directive. This is the strongest way to increase harmoniza-tion and coherence of the data protection legal framework within the EU, as regulations are directly applicable in the EU without the requirement of Member States having to transpose the European rules in national laws, often adding their own interpretations.

TERRITORIAL SCOPE WOULD BE SUBSTANTIALLY EXTENDED

The Draft Regulation would expand the rules governing the jurisdictional reach of EU data pro-tection laws. Existing law applies based on the place of establishment of the controller and/or the equip-ment used by the controller to process the data. The Draft Regulation goes beyond that in applying the law to any processing of personal data that is “directed to” data subjects residing in the EU, or “serves to monitor the behavior” of such data sub-jects. Recital 15 of the Draft Regulation clarifies that, in this context, “directed to” implies that it should be ascertained whether it is apparent from the controller’s overall activity that the controller was envisaging the processing of personal data of data subjects residing in the EU. This would be of particular significance to non-EU Web sites directed in part towards EU citizens. A non-EU control-ler caught by this provision would be required to designate an EU representative to act on behalf of the controller and to be answerable to the EU data protection authority.

DEFINITIONS THAT CLARIFY AND EXPAND THE SCOPE OF THE LAW

The Draft Regulation introduces a number of new definitions, such as for “personal data breach,” “genetic data,” “biometric data,” “data concern-ing health,” “main establishment,” “representative,” “group of undertakings,” “binding corporate rules,” and “child.”

The Draft Regulation also modifies existing definitions. For example, the definition of “data subject” now explicitly refers to “online identifiers” (such as Internet Protocol addresses and cookie identifiers) as one of the factors that may entail direct or indirect identification of a data subject.

Also, the proposed definition of “controller” refers to an additional criterion: The controller is the person determining the purposes, means, and condi-tions of the processing of personal data. In addition, the Draft Regulation confirms, albeit only in its Recitals, that the law should not apply to “data ren-dered anonymous in such a way that the data subject is no longer identifiable.”

CONSENT WOULD BE MORE DIFFICULT TO OBTAIN

The Draft Regulation appears to resolve dif-ferences among EU Member State laws regarding whether data subject consent must be implicit or explicit through a definition of “consent” that requires consent to be explicit. The Draft Regulation casts serious doubt on the validity of implied con-sent by stating that “silence or inactivity would not constitute consent.” It further puts the burden of proof on the controller to show that valid consent has been explicitly given. On the other hand, the Draft Regulation clarifies that consent may be given by any appropriate method enabling a freely given, specific, and informed indication of the data sub-ject’s wishes, based on an affirmative action made by the data subject, including by ticking a box when visiting a Web site or by any other statement or conduct that clearly indicates the data subject’s acceptance of the proposed processing of his or her personal data.

Of particular concern to employers, the Draft Regulation states that consent can no longer be relied upon as a basis for processing for the purpose of carrying out obligations and exercising rights of the controller in employment law or when there is a significant imbalance in the form of dependence between the position of the data subject and the controller. This would require employers to rethink significantly their approach to data protection com-pliance. As the Draft Regulation continues the European Commission’s recognition of exceptions for compliance with legal obligations solely under EU or EU Member State laws, rejecting the validity of employee consent would create particular complica-tions for multinational companies’ compliance with non-EU legal obligations, such as screening, internal investigations, and monitoring by the US Office of Foreign Assets Control (OFAC).

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NEW DATA SUBJECT RIGHTS AND CONTROLLER AND PROCESSOR OBLIGATIONS

The Draft Regulation introduces several innova-tive concepts that would significantly expand both data subjects’ rights and controllers’ obligations:

• Right to be forgotten. Data subjects would be entitled to require controllers to erase their per-sonal data when they withdraw their consent for processing or when they object to the processing of personal data concerning them. The Draft Regulation stresses that this new right is particu-larly relevant to data provided by minors.

• Privacy impact assessment. Controllers or pro-cessors would be required to make impact assess-ments before carrying out processing that is likely to present “specific risks” (such as the processing of sensitive data).

• Privacy by design and by default. The Draft Regulation contains a mandatory requirement for both privacy by design and privacy by default that would require that (1) the control-ler, prior to and during the processing, imple-ment appropriate technical and organizational measures and procedures so that the processing meets the requirements of the Regulation and ensures the protection of the data subject’s rights; and (2) the controller would need to implement mechanisms that ensure, by default, that only those personal data necessary for each specific purpose of the processing are processed, and that such data are not collected or retained beyond the minimum period necessary for those purposes.

• Data portability. Data subjects would be given a new right to obtain a copy of their data in a “structured format which is commonly used” and the right to transfer data from one automated processing system (for instance, a social network) to another, without being prevented from doing so by the controller.

HARMONIZATION TO SIMPLIFY COMPLIANCE FOR BUSINESSES

The Draft Regulation contains several signifi-cant changes that are intended to ease the data

protection compliance obstacles that businesses face today: • One-stop-shop. The Draft Regulation contains

significant “one-stop-shop” provisions that would have a major impact on international organizations with operations across a number of EU Member States. The data protection authorities in the “main establishment” of the controller would be responsible for decisions relating to the controller across its EU opera-tions. This could result in, for example, British operations of a pan-European business falling under the control of the Spanish, French, or German data protection authority, depending on the location of the main establishment. This should offer greater harmonization and certainty for controllers. However, bearing in mind the very different approaches to enforcement taken by EU data protection authorities to date, it will be very interesting to see how this develops in practice.

• International transfers. The Draft Regulation contains a significant change to existing law that would enable controllers to make certain trans-fers of data outside of the European Economic Area (EEA) when it is in the legitimate interests of the controller or the processor. This would only apply in cases in which the transfer is not “frequent, massive, or structural” but would, nevertheless, be welcomed by international businesses. In addition, the Draft Regulation envisions binding corporate rules for processors, approval of additional standard data transfer clauses beyond the model clauses, and flexibil-ity for the European Commission to determine jurisdictions’ “adequacy” to receive international data transfers for particular industry sectors or territories within a country.

NEW OBLIGATIONS FOR CONTROLLERS AND PROCESSORS

If the Draft Regulation becomes law, many of the obligations that are currently imposed by the Data Protection Directive only on controllers would also be imposed on processors. This would be of some concern to service providers and out-sourcing entities and would likely require a reas-sessment of the standard approach to the allocation

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of obligations and liability in standard outsourcing arrangements.

In addition, a number of new obligations are introduced by the Draft Regulation:

• Documentation. One of the key issues of the current European Data Protection Directive is the administrative burden imposed on control-lers to register all data processing activities with the local data protection authority. The Draft Regulation would replace this notification obli-gation with an obligation for controllers and processors to keep extensive documentation to demonstrate that the processing operations under their responsibility are compliant. This embodies the “accountability principle,” which was much discussed in the review of the Directive leading up to the release of the Draft Regulation.

• Data protection officer. For processing activi-ties carried out by the public sector or by a large enterprise (over 250 employees) in the private sector, or when the core activities of the control-ler or processor consist of processing operations that require regular and systematic monitoring, an independent data protection officer must be appointed to monitor whether the processing activities are carried out in compliance with the data protection policy and the Draft Regulation.

• Security breach notification. The Draft Regulation would impose an extremely broad security breach notification requirement for a controller to notify both data protection authori-ties and data subjects within 24 hours of a data security breach. The security breach notice requirement would apply to the accidental or unlawful destruction, loss, alteration, unauthor-ized disclosure of, or access to any personal data. Unlike many existing breach notice laws, the requirement to notify the data protection author-ity would apply regardless of any risk of harm to data subjects. However, the requirement to notify data subjects requires some harm to the privacy

of data subjects and does not apply when the controller can demonstrate that all the data were encrypted or otherwise rendered unintelligible.

• Agreement between joint controllers. Joint con-trollers would have to sign an agreement allocat-ing responsibility between them. In the absence of such an agreement, the controllers would be jointly liable for all processing activities.

• Data subject’s requests. In the event that a data subject introduces a request to exercise his or her rights, the controller is obliged to respond to such a request by a fixed deadline. In the event that the controller does not intend to comply with the data subject’s request, the controller must still respond by the deadline and provide reasons for not complying with the request.

INCREASED ENFORCEMENT

Among the key objectives of the Regulation are to harmonize the enforcement powers of the local data protection authorities and to make remedies and sanctions more effective.

A feature of the Draft Regulation that may be of most interest to businesses is the new power of imposing fines. Data protection authorities would be empowered to impose fines of 100,000 to 1 mil-lion Euros or, in the case of “an enterprise,” up to 5 percent of the annual worldwide turnover for a broad range of negligent or intentional violations of Regulation requirements.

NOTES

1. Two legal instruments were introduced, namely the “Proposal for a Regulation of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data and on the free movement of such data” (General Data Protection Regulation) and the “Proposal for a Directive of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data by com-petent authorities for the purposes of intervention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and the free movement of such data” (Police and Criminal Justice Data Protection Directive). This article only discusses the General Data Protection Regulation.

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In Brief

Internet Law in the Courts

By Evan Brown

USE OF TRADEMARK IN GRIPE-SITE SUBDOMAIN WAS NOT LIKELY TO CAUSE CONFUSION

The plaintiffs sued gripe site pissedconsumer.com for trademark infringement and other forms of unfair competition. The court denied the plain-tiffs’ motion for a preliminary injunction. It found,

among other things, that the defendants’ use of the plaintiffs’ trademarks as subdomains ( e.g.,ascentive.pissedconsumer.com ) was not likely to cause confusion.

The court looked to other cases in which gripe-site operators chose negative words to use in conjunc-tion with the company being criticized. Over the years, gripe-site operators have commonly chosen to add the word “sucks” to the targeted brand. For example, in Taubman Co. v. Webfeats , 319 F.3d 770 (6th Cir. 2003), the court held that there was no trademark violation by the site taubmansucks.com.

Other uniform resource locators (URLs) contain-ing “sucks” have risen above the trademark infringe-ment fray. In a case from over a decade ago, the court found that the Web address compupix.com/ballysucks would not create the likelihood of confusion because no reasonable visitor to the site would assume it to come from the same source or think it to be affiliated with, connected with, or sponsored by Bally. [ Bally Total Fitness v. Faber , 29 F.Supp.2d 1161 (C.D. Cal. 1998).]

It’s not just that these brands are purported to “suck.” In Taylor Building Corp. v. Benfield , 507 F.Supp.2d 832 (S.D. Ohio 2007), the court found that taylorhomesripoff.com , used in connection with a forum for criticizing the plaintiff, did not create any likelihood of confusion.

In this case, the notion of being “pissed” joined a lexicon of permissible gripe-site nomenclature (depending on the circumstances, of course). So said the court: “Like the word ‘sucks,’ the word ‘pissed’ has entered the vernacular as a word instinct with criti-cism and negativity. Thus, no reasonable visitor to the [offending Web pages] would assume the sites to be affiliated with the [plaintiffs], and PissedConsumer’s use of plaintiffs’ marks in the various domain names at issue is not likely to cause confusion as to source.” [ Ascentive, LLC v. Opinion Corp ., 2001 WL 6181452 (E.D.N.Y. December 13, 2011).]

COURT ENFORCES ONLINE TERMS AND CONDITIONS INCORPORATED BY REFERENCE IN INVOICES

The plaintiff, a manufacturer, sued one of its distributors over unpaid invoices. The defendant moved to dismiss, citing an arbitration provision in the terms and conditions on the plaintiff ’s Web site. The district court dismissed the complaint and the plaintiff sought review with the Ninth Circuit Court of Appeals. The court affirmed the district court’s ruling. It held that the district court did not err in concluding that an arbitration agreement existed between the parties. Although the language of the hard copy distribution agreement did not address arbitration, it provided that the plaintiff could uni-laterally establish terms of sale from time to time. Each invoice referred to the terms and conditions of the plaintiff ’s Web site. The court found that these referenced terms and conditions “clearly and unmis-takably delegated the question of arbitrability to an arbitrator.”

The decision supports the notion that contract-ing parties (particularly merchants selling goods) may rely on provisions not spelled out in any docu-ments exchanged between them, but rather appear-ing online and incorporated by reference. In other words, certain online contracts other than clickwrap and browsewrap agreements may be enforceable.

Evan Brown is an attorney in the Chicago office of Hinshaw & Culbertson LLP, practicing in the areas of copyright, trademark, and technology law. He is the author of the weblog found at http://www.internetcases.com , which tracks legal developments involving the Internet and new technologies. Mr. Brown can be reached by email at [email protected] and by telephone at (312) 704-3757.

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[ Fadal Machining Centers, LLC v. Compumachine, Inc ., 2011 WL 6254979 (9th Cir. December 15, 2011).]

OREGON MEDIA SHIELD LAW DID NOT PROTECT BLOGGER FROM HAVING TO REVEAL HER SOURCES

The plaintiff filed a defamation lawsuit against the defendant, who self-identified as an “investigative blogger” and a member of the “media.” The defendant asked the court to protect her from having to turn over the identity of the sources she spoke with in connection with drafting the allegedly defamatory content. She claimed that she was covered under Oregon’s media shield law, which provides, in part, that:

No person connected with, employed by or engaged in any medium of communication to the public shall be required by . . . a judicial officer . . . to disclose, by subpoena or other-wise . . . [t]he source of any published or unpub-lished information obtained by the person in the course of gathering, receiving or processing

information for any medium of communication to the public.

The court gave two reasons for finding that the defendant was not covered by the shield law. First, although the defendant thought of herself as being part of the “media,” the record failed to show that she was affiliated with any newspaper, magazine, periodi-cal, book, pamphlet, news service, wire service, news or feature syndicate, broadcast station or network, or cable television system. Thus, according to the court, she was not entitled to the protections of the law in the first instance.

Second, even if the defendant were otherwise entitled to those protections, another part of the statute specifically provides that: “The provisions of [the shield law] do not apply with respect to the content or source of allegedly defamatory informa-tion, in [a] civil action for defamation wherein the defendant asserts a defense based on the content or source of such information.” Because this case was a civil action for defamation, the defendant could not rely on the media shield law. [ Obsidian Finance Group, LLC v. Cox , 2011 WL 5999334 (D.Or. November 30, 2011).]

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