2000 ice og Opinion UK. Competition Act 1998—Double, Single or no Jeopardy at all Articles bei as ae ee Orel Oca ‘Transfer of Technology—Direct Regulations in Brazi—Part Ill Year 2000 Information Disclosure Act 1999—New Zealand Copyright Protection of Software—in Israel and in Cyberspace Lorton eeu Recta Me ort agers Maree We ceun et Book Reviews eee ou eng aU eaten eect cag &.C. Measures Table Cee nt a eee eee con Moccia APT a Ta ISSN 1357 3128Y orga 2 Opinion PETER R. WILLIS Double, Single or no Jeopardy at al CONTENTS : [2000] C-TLR. i February COMPUTER AND TELECOMMUNICATIONS LAW REVIEW ‘VOLUME 6 : ISSUE | : 2000 : ISSN 1357 3128 Concurrent Jurisdiction under the Competition Act 1998 The Competition Act 1998, which enters into force on March 1, 2000, will be enforced in the telecommunications sector by OFTEL. concurrently with the Office of Fair Trading. This article reviews the draft regulations proposed by the DTI in October last year, which set out how concurrency will operate. Articles STEPHAN LE-GOUEFF The Draft Luxembourg E-Commerce Law ‘The Luxembourg draft law on electronic commerce, published in April 1999, aims to create a favourable environment for e-commerce in Luxembourg. If the draft law achieves its objective to grant recognition to electronic transactions by accepting the use of encryption and by making it possible to grant legal existence to the e-signature and e-document, this article argues that some uncertainties remain regarding the value of the electronic sig- nature, qualified certificate and digital document. LUCIANO BENETTI TIMM The Transfer of Technology Direct Regulations in Brazil—Part TH The new antitrust law regime represents the latest chapter in the history of Brazilian legislation with respect to technology transfer regulation. The third part of this article (Parts | and li were published at CT.L.R. [1999] 217 andCTL.R. [1999] 229 respec- tively) gives an introduction to Brazilian competition law and looks at how this system should operate. EARL GRAY AND An Examination of New Zealand’s Year 2000 Information Dis- SAMITHA DE SILVA closure Act 1999 The main objective of the Year 2000 Information Disclosure Act 1999 is to encourage the voluntary disclosure and exchange of information about Year 2000 date processing problems and reme- dies, while providing certain safeguaids against liability. This article examines the Act in detail. In addition to discussing the rationale and history behind the Act, it looks at related issues and gives, some practical steps for organisations to gain the most jenefit from the Act. NAOMI ASSIA Copyright Protection of Software in Israel and in Cyberspace Computer software piracy has beconte increasingly common in Israel, where firms often use large cumbers of illegal copies of software after purchasing just a few legal copies, This article outlines how software corporations can fight back by giving an gverview of the methods of copyright protection available t copyright owners of computer software in Israel. PETER KNIGHT Current Issues in Copyright and Computer Related Products Australian copyright Iaw has been the subject of more amend- ments and proposals for amendment since 1984 than in the entire period since Federation prior to that year. These amendments have een overwhelmingly concerned with new technologies. This article considers some of these amendments and argues that they ROO CLR SUE | © SWEET RaKWE UMITED [AND CONTRIBUTORS, 23HW CONTENTS : [2000] CTLR. have dealt poorly ‘with computer programs and other technical issues and that Australian copyright law would have been better off without them. Book Reviews Telecommunications—The E.U. Law 41 Electronic Banking and Treasury Security 43 £.C. Measures computing, Telecommunications and Related Measures Nel Table [00] CLA. SUE | © SWEET & MAXWELL UMTED [AND CONTRELTORS!Epitor MOT. MICHELE RENNIE Cooputaiaw Eainbureh EDITORIAL BOARD AND COUNTRY CORRESPONDENTS : [2000] C.TLR. fi Epiroriat Apvisory BoaRD HENRY CARR Barer London ROBYN DURIE Linklaters & Alliance London ‘cuve crinoras Clswang London CounTRY CoRRESPONDENTS Austraua ANNE FITZGERALD Gold coast Australis PETER LEONARD. DAVID STANDEN ‘ilber & Tobin Sydray [MARK SNEDDON University of Melbourne Malboure Austria MARTIN BRODEY Dorda Brugger & Joris Vienna BeLctum GEERT GLAS ‘eve Caeys Verbeke Brussels Brazi. ANTONIO CARLOS ¢. MAZZUCO Veirano e Advogacos Asociados Sao Paulo CaNapA BARRY B. SOOKMAN Dccartay 6 Téerait ‘Toronto France PREDERIQUE DUPLIS-TOUBOL, Jeantt et Assoclés Pais [ERIC MORGAN DE RIVERY KATE THACKERAY PASCAL CUCKE Siméon & Associés Paris Grnmany PETER CHROCZISL. Brucidaus Westrick Stegernana -ranikfure am Main RICHARD LEITERMANN ‘wilkinson, Barker, Knauer and Quinn Frankfort ax ain KARL H, PLAY (Couder Brothers Berl (CHRIS PARKER Digital equipmene co. Limited Reading PAUL TAYLOR Orchacd London Gretce LEONIDAS KANELLOS Kokas-Kanellos & Associates Athens Hone Kons TOM HOPE, Linklaers&Paines Fong Koag KH. PUN Department of Computer Scionce University of Hong Kong, PETER WATERS MICHAEL REEDE (lib: & Tobin Sydney Inna PRAVIN ANAND Anand & Anand New Debit ved ANDREA VALLE Novell, Pores & Vall Rome PAOLO CERIKA, Bresio Casati e Associa Mian Japan TTERLO DOL ‘Waseda Universy Tokyo Euxemsourc STEPHAN LE GOUERE te Gouel taw Offer Lsxemboug, NETHERLANDS CCORIEN PRINS Daiversiy of Leiden elden Datversty of Tburg ‘bug ANNETIE oTTOW ‘YVONNE SCHERS Houtiont Amsterdam New Zcatanp EN MOON, Ay Park & Son Auckland coon warp Love Whize Durrans Landon ALAN WHITEIELD Soiiior oT ‘ondon Norway ‘ERIK JENSEN Kluge Advokatfiona ans oso Repupitc oF IRELAND JARLETH BURKE sac Telecom Diblia| ‘Smcarore ‘ALBAN KANG ‘Alban Tay Mahtani & De Stva Singapore Sourn Arnica CHARLES H. BERMAN ‘Adams & Adams Johannesburg MARCO VAN DER MERWE, ‘Spoor and Fisher Precrla Sain ‘ALMUDENA ARPON DE MENDIVIL, Gomez-Actho & Pombo Madrig ‘Swepen, MAGDALENA HAGG ‘Svea Court of Appeal Swirzertanp MARTIN LANZ Schellenberg & Hasty Zurich Taiwan HUBERT HSU Hubert Hist & Associazes Taiwan ‘Taananp DAVID Took counsel Bangiok Unrrep Kincpom ROBYN DURIE Linklaters 8 Palnes London ‘TIM JOHNSON JACQUELINE BURT ‘51 Berwin & Co, London (© S0aET a MVELL UNITED [AND CONTRIBUTORS] News Section EpitoR SIMON STOKES: ‘cl Lyons, ‘London ‘SIMON JONES Nabarco Wathanson, Landon HEATHER ROWE CONOR WARD Lovell White Durant London NIGEL STAM? Baker & Mckenzie ‘London usa RICHARD HL. STERN blond, Foster, Sobin & Davidow ‘Washington DC Just. BOOKEY ‘wilkinson, Barker, Xnauer @ Quinn Washington DC (CHARLES B. COHLER, Lasky, Haas & Comer San Francisco Jor RxaNG. Knobbe, Martens, Olson & Bear ‘Newport Beach Calorie JOHN SWINSON Mallesons Stephen Jeques Brisbane Eu [MAYA BARR Eresheles Decinger Brussels ANDREAS BARTOSCA Gleiss Hoots Lute & Ritsch Brussels J, MARK NAPTEL Bid & Bid Brussels ELIZABETH ANN STATON Freshfields London SIMOW M. TAYLOR, Narn Rose Brussels ROGER TUCKETT Hermes Burope Ral BV Brusselsiv EDITORIAL BOARD AND COUNTRY CORRESPONDENTS : [2000] TLR. PUBLISHING etl@emlawpub.cowle This journal should be ciced as [2000] C.TLR. 000 ISSN 1357 3128 Published by Sweet & Maxwell Led ‘Typeset by Inceractive Sciences Led, Gloucescer Printed and bound in Great Britain by ‘The Headway Press, Reading CONTRIBUTIONS ‘The Editorial Board welcomes contributions to the Law Review. All ‘material should be submitted in typescript form, on Ad paper in double line spacing, together with a disk if available, and sent co: ‘Anand Shukla, CTL. Sweet & Maxwell Led 100 Avenue Road London NW3 3PF United Kingdom Telephone: 020 7393 7000 International: +44 20 7393 7000 Fax: 020 7393 7333 International: +44 20 7393 7333 SUBSCRIPTIONS AND ORDERS ‘Annual subscription £325 (US$578) plus £15 airmail postage outside Curope for B issues plus index. Bound Volume Service is £39 (US§168) extra. Sweet & Maxwell Lid Subscriptions Department FREEPOST Andover Hants SP10 SBR United Kingdom DX 120950 Andover 5 Telephone: 01264 342766 International: +44 1264 342766 Fax: 01264 342723, Internacional: +44 1264 342761 © Sweet & Mascwell Ltd 2000, All rights reserved. UK. statutory material in tis publication is acknowledged as Crow copyright. No pare of this publication may be reproduced or transmitted inary form or by any means, or stored in any retrieval system of any nature ‘without prior written permission, except for permitced fair dealing under che Copyright. Designs and Patents Act 1988, or in accordance with the terms of a licence issued by the Copyright Licensing Agency in respect of photocopying and/or reprographic reproduction. Application for permission for other use of copyright material Inchiding permission wo reproduce extracts in other published works shall be made to the publishers, Full acknowledgement of author, publisher and source must be given. (2 SWE & MAWELL LMITED [AND CONTRILTORS]1 UR 99/1168; avaliable on she DTI website at Innova gouakicompettion/l/cone soc.pat 2 Comesponding amendments are made 10 the other sector statutes, 3 In place ofthe existing subs. (8) which provides Jr concurentjuisdsion in relation to the largely ‘nelfecual and litle used Cempettion Act 1980, 4 Thisis defined ins.4(S) ofthe TA. 1984 28 “the provision of telecommuicavons services, the sup- py or expoct of wlzcommuricaon apparanus and the producton ce acyuiston of euch apperans for supply or export” 5 para. 2(4) of Sched. 10 whe C.A. 1998, which inserts a new 5.5(38)inta the TA. (984, 6 para. 9(4) of Sched. 10 w the C.A. 1998, which Inserts a rew s.16(6)(0) inte the EA. 1984 7 ‘Se, for example, condlion 31 of B's Heence, Wich imposes @ mini-Chapeer | prohibition and & mini-Chapeer Ml prchibien ia condition $4.1 and provides in conditon 31.9 for the condition to cease m apply on entry info force of any Act contalning- ‘#2 sina protibidon drecy enforoable by the Dox 1 thicd pary remedies, and nancial penaies for Iningemert, OPINION + [2000 CLR. 1 Double, Single or no Jeopardy at all: Concurrent Jurisdiction under the Competition Act 1998 Introduction ‘The Competition Act 1998 (C.A. 1998), which introduces a new: prohibition-based competition law to the United Kingdom with effect from March 1, 2000, will be enforced concurrently by the Director-General of Fair Trading (DGFT) and, within their respective sectors, by the regulators, including the Director-General of ‘Telecommunications (DGT). However, the C.A. 1998 itself does not spell out in any detail how this concurrent jurisdiction is intended to work. Critics of the new regime have predicted a free-forall, in which businesses will be at tisk of simultaneous and possibly conflicting investigations by regulators and the DGFT. The more pragmatic among them have pointed to the flexible and largely informal arrange- ments promised or already in place uncer existing legislation. In October 1999, the DTI published for consultation draft regulations on concurrency,* which fl most of the gaps in the relevant provisions of the C.A. 1998, This article examines the structure of concurrent jusisdiction putin place by the C.A. 1998 end by the DI’s proposals, with particular reference to the telecommunications sector. The DGT’s Concurrent Jurisdiction Concumtent jurisdiction is introduced by section 54(2) of the CA. 1998, which provides: “Parts Il and Il of Schedule 16 provide for functions of the {DGFT] under this Part to be exercisable concurrently by regulators.” Part 11 of Schedule 10 ‘operates by atnending the sector statutes: in the case of telecommunications, this is the Teiecommunications Act 1984 (LA. 1984).? ‘The principal amendment is made by patagraph 2(6) of Schedule 10 to the CA, 1998, which substinstes a new subsection (3) into section 50 of the TA. 1984.5 This new section provides that the DGT is entitled to exercise, concurrently with the DGFT, the functions of the DGFT under Part I of the C.a. 1998 (with certain exceptions) in relation to agreements and conduct “which relate to Commercial activites connected with telecommunications”.* Functions of the DOFT under Part I of the C.A. 1998 ate those relating to the application of the substantive prohibitions on ani-compettive agreements and abuses of dominance. ‘The functions of the DGFT under Part lof the C.A. 1998 which are not subject to concurrent jurisdiction of the DGT and other regulators are those relating to the publication of procedural rules and guidance on penalties. Those are zesecved to the DGFT alone, When exercising concurrent jurisdiction under the C.A. 1998, the DGT naed ‘ot pursue specific T.A. 1984 objectives (such as the promotion of efficiency and economy), although he may do so to the extent that those objectives may also be categorised as general competition policy cbjectives.® Nor is the DGT required to exercise his powers under thé T.A. 1984 to secure compliance by an operator with the terms ofits licence if he is satisfied that the most appropriate way of proceeding is under the C.A."1998.* The question of whether the DGT proceeds under the C.A. 1998 or under licence enforcement powers will involve balancing on the one hand the cumbers some procedures, but more specific licence.conditions (for example, prohibitions on ‘undue discrimination or cross-subsidisation) under the TA. 1984 and, on the other, the more effective procedures, but mote economically and legelly rigorous Tequirements for establishing an inftingement, under the C.A. 1998. Many 1984 licences now include a fair trading condition, which effectively applies mini- Chapter I and Chapter If prohibitions via the licences. These licence conditions will fall away when the real Chapter I and Chapter Il prohibitions zake effect, but have provided a useful transition for both OFTEL and operatons” The Nature of Concurrency Having established the gencral principle of concurrency, the C.A. 1998 itself does not spell out how itis to work in practice and, in particulas, to what extent and how2 OPINION : [2000] CLR, 8 Before amendment by the CA. 1988, 3 50(4} of the LA, 1984 provided: “Before ether Ditexror (te. the DGT of the DGFT] frst exercises in celaton to any mater (functions under the Fair Trading Actos the Compeition Act 1980 transimedto the DGT by the TA. 1984) he shall consult with the other Directo; and neither Dirsctor shall exercise in ‘elation to any matter functions transfered by ary of those provisions if functions mentioned in that provision have been exercised in relation 0 that matter by the ether Director” 9 Hansard, February 23, 1998, cl, 462/455. 10 Sthed. 10, para, 2(7) of the Act deleted S50(Q46) of the TA. 19864 11 Bil pane dated Mare A, 1008 52 In October 1999, tne regulators published a -saterent on joint wozking outing the co-ordin- tion rle ofthe CWE, "Te will become the forum for maintaining cose working between the regulators ‘and the DOFT and ensuring consistency and cohee- ‘ence in policy development ard in the procedures, fc handling cases". hupiwwwftel govailfeed Daclegs1 099m, : 13 Competition Act guideline, Concurrent Appi ion to Regubaced Industries, (OFT 408}, paras 3.7 and 3.5, 14 Indeed, 5.50(6) of the T.A. 1984 provides for questions as 0 the jurisdiction of the DOT under the CA, 1898 tobe refered to and determined by the Seerrary of Sate 18 OFT 405, at para. 5.1. 16 heipy/vnrw.of gowuld/heml/comp-acuidown leadfohs11 pa. 17 Drate ne 5,5}. 438 Drafe mle Bt). 19 Failure te do 80, however, wil not the notfcation: OFT 405, at para. 5.5. 20 Draft rule 82), 21 OFT 405, a para. 3.8. those entitled to exercise C.A. 1998 functions concurrently are to co-ordinate their activities. ‘The CA. 1998 does not adopt the “first past the post” system applying to the exercise of functions under existing competition legislation (the Competition Act 1980 and the Fair Trading Act 1973), whereby the DGFT and the DGT must consult before acting and action by either precludes subsequent action by the other* In Parliament, Lord Simon expressed concems that the system would prevent the DGET and DGT from working together, even where that would be clearly helpful, and would prevent a case being switched between the DGFT and the DGT even where a change of circumstances made that approptiate.* ‘The TA. 1984 was therefore amended so that the exercise of functions under the C.A. 1998 is not subject to the “first past the post” rule.*® Action by either the DGET ot the DGT does not preclude action by the other. Conversely, concuirent jurisdiction is not necessarily joint. There is no obligation on either the DGFT or the DGT to act where they have jurisdiction to do so, Section 54(2) of the C.A. 1998 provides that functions of the DGFT are “exercisable” rather than, 2s an carlir draft ofthe Bill provided,'+ "to be exercised’ concurrently. Similarly, the new section 50(3) of the LA. 1984 provides that the DGT “shall be entitled to exercise, concurrently with the DGFT, the functions of that Director under the Competition Act 1998" [author's emphasis]. Therefore they need not act together. Both, one or neither may act. So, ifthe CA. 1998 provides chat concurrent jurisdiction is neither exclusive nor joint, what exactly is 1? It is his regulatory vacuum that has prompted fears of 2 free-for-all, with the risk of tutf fights, double jeopardy and lack of co-ordination, In practice, itis unlikely that such extremes will be encountered. The informal Concurrency Working Party (CWP), at which each regulator is represented, and which is chaired by a representative of the OFT, was formed in 1997 to co-ordinate thelr activities." One of its functions is, according to the Competition Act guideline Concurrent Application to Regulated Industries, to ensure that "a single case would not be investigated by more than one authority.” The CWP will also, in the event of disagreement, “consider which authocity would be the more or most appropriate to handle the case’."? It should be noted, however, that it has no authority under the Act to do so.** “The principle set out with admzable clarity in the guideline is that “a case will be dealt with by whichever of the DGFT or the relevant regulator is better, or best, placed to do so.” In general, if @ matter falls within the jurisdiction of a regulator, that regulator rather than the DGET will deal with it. 'it appears that there may be concurtent jurisdiction, the DGFT and the reguiators concerned will consult each other before acting. '* Co-ordination under the DGFT’s Procedural Rules ‘The draft procedural rules submitted to the Secretary of State for approval in February 1999 also touch on the subject of concurrency. Notifications for guidance or decisions must be addressed to the OFT, which will act 25 a clearing house. Where the applicant considers that one or more regulators may have concurrent jufsticrion, it must submit an additional copy of the notification to the DGFT for each regulator.” Ifthe DGFT agtees, he will then send a copy of the notification to the regulator or regulators concerned, and will inform the applicant that he has done so.'? The guideline on concurrency states that the applicant should: also send a further copy directly to the regulator concemed,?® The relevant regulator will then usually deal with such applications. The applicant will be informed who is to deal with the applicetion, and of any subsequent transfer of the case to another regulator or the DGFT? The draft ules make no provision for complaints or applications for interim measures: they may be directed either tothe DGT or to the DGFT (not to both) and will usually be dealt with by the DOT rather then the OFT, particularly if che complaint alleges breach of both the prohibitions in the C.A. 1998 and TA. 1984 licence conditions.** [20] CTL. SUE 1 @ SWEET 2 MAXWELL LIMTED (AND CONTRIBUTORS)22 bezunywwdt govsik/sompetion/ily cowpat OPINION : [2000] CLA. 3 Technical Issues Although it is clear from the C.A. 1998 that both the DGFT and the DGT have the power to apply the Actin the telecommunications sector, itis net clear, under the strict wording of the Act, that they may both do so at the same time in & pasticular case. Furthermore, wheteas the DGFT has jurisdiction in all the regulated sectors and could therefore investigate a case involving, for example, a telecommunica- tions cable strung next to a raitway wack, the DGT could consider only the telecommunications aspects of such a case and the rail regulator only the sall issues. It is not completely clear from the C.A. 1998 whether they could work jointly on the case (cach considering oily the aspects within his sector). Itis also debatable precisely to what extent the DGFT and the DGT can disclose Information to each other when detemmining which is to exercise jurisdiction and while exercising that jurisdiction. The provisions of the C.A. 1998 relating to investigations raise further obstacles to concurrency. For example, section 27, which sets out the power to camy out on-site investigations, provices that they may be carried out by “any officer of the Director who is authorised in writing by the Dizector to do so", The natural meaning of this provision is that the DGFT can authorise only his own officials, not the officials of the DGT, and vice versa, This would prevent the DGT from calling on the experienced OFT investigators to carry out on-site investiga- tions for him. The Need for Concurrency Regulations The question of how concurrency would work in practice escaped detailed scrutiny in Parliament, because the government included provision for regulations which would spell out the detail. Section 54(4) of the C.A. 1998 gives the Secretary of State the power to make regulations for the purposes of co-ordinating the exercise of funcions under Part | of the C.A. 1998 bepween the DGFT and the regulators, where two or more of them have concutrent jurisdiction. The non-exhaustive list set out in section 54(5) includes provision fer: {) the procedure to be followed when deciding who is to exercise concurrent jutisdicton; (b) the steps to be taken before a regulator or the DGFT exercises concurrent jurisdiction; (6) the procedure for determining who is to exercise concurrent jurisdiction; (@) joint exercise of functions by two or more regulators or by the DGFT and one or more regulators; (€) the circumstances in which the exercise of functions by the DGFT or a regulator prechudes the exercise of functions by another such person; (O the transfer of functions between the regulators and between the reg- ulators and the DGFT; (@) the DGFT and the regulators to sub-contract functions to each other or to second officers to each ater; and (8) notification as to who is to exercise functions in a particular case, ‘The DTI consulted on the need and scope for regulations in February 1999"; its view at that time seemed to be that regulations might not be required. The OFT and the regulators identified a number of specific technical matters which they believed required regulations, whereas businesses favoured regulations addressing the umbrella question of co-ordination. The draft regulations address both types of issue. The Draft Concurrency Regulations ‘The draft concurrency regulations addcess, in'whole or in patt, all the points raised in section 54(4) of the C.A. 1998 mentioned above, other than (4). This omission is discussed further below. ‘The details of the draft regulations bear closer examination. They are intended 10 come into force on March 1, 2000, t9 coincide with the entuy Into force of the substantive provisions of the C.A. 1998, [Bt FLA ISLE 1 © SWEET & FARWELL LIMITED [AND CONTRBUTORS4 OPINION = [2000] CLR. 23. Rv MOG exp. Elders IXL (1987) 1 AER, 4451; Wiis, “Procedural Nuggess fom the "Klon= dike Clause’: The Appleation of s.60 of the Gom- petton Act 1998 to che Procedures of the OFT" 11999] ECLR S14, Information Exchanges Draft regulation 3 is designed to overcome concerns about the extent to which section 55 permits disclosure of information between the DGET and the regulazors, and bepween the regulators, when deciding which is to exercise jurisdiction. In the absence of consent, section 55 permits disclosure of information relating to a business or an indivicual only where itis for specified purposes, Including facilitating the performance of functions of the DGET and the regulators under the C.A. 1998 and the regulators’ respective statutes, The question in this context is 0 what extent disclosure by the DGFT to one or more regulators of some or all of the contents of an application, or by the DGFT or a regulatot of some or all of the contents of a complaint, may be said to be for the purposes of facilitating the performance of functions under the C.A. 1998. In practice, the DGFT and the regulators will have considerable discretion as to the disclosure of information 2° Hoviever, draft regulation 3 eliminates the need for the DGFT and the regulators to justify disclosure in terms of section $5 by providing that the DGFT may cisclose details of applications to the zegulators, and that the DGFT and the regulators may discicse to each other details of complaints received, whether or not the recipients of such disclosures are likely to have concurrent jurisdiction. Applicants and complainants in the telecommunications sector should ‘assume that their communications with the DGFT are likely to be passed on to the Der. Deciding Who will exercise Certain Functions Draft regulation 4 provides a mechanism for the DGFT and the regulators to agree which of them is to exercise certain Functions in a particular case. The functions whose exercise is covered by this mechanism, referred to as “prescribed functions” In the draft regulations, include: © exercise of the formal investigative powers; ‘© making an appealable decision, including an interim measures direction; © issuing a statement of objections under draft nule 14 (a statement of the fects, reasons and proposed action prior to making an infringement or conditional exemption decision); © issuing guidance; © making a provisional indtingement decision following a notification, the effect of which is to withdraw the immunity from penalties confemed by notiication; © withdrawing or limiting @ parallel exemption; or © withdrawing certain exclusions (although not the exclusions for vertical and land agreements) For these purposes, the DGFT and the regulators are together described as “competent persons”. In the case ofapplications, the mechanism fs triggered by the DGFT considering that 2 regulator may have concurrent jurisdiction. He must send a copy of the notification to that regulatcr, and inform the applicant that he has done so. In own-initiative cases ané complaints, ifa competent person proposes to exercise any of the prescuibed functions listed above, and considers that another competent person may have concurrent jurisdiction, he must inform that other competent person of his intention. In either case, the competent persons concemed must then agree which of them is to exercise the prescribed functions. Although the regulations make no provision, the explanatory note indicates thet the CWP will have an advisory role at this stage. The DGFT will then inform the relevant ‘competent persons and, in the case of an application, the applicant, who is to exercise prescribed functions. Settling Turf Fights If the relevant competent persons are unable to agree who is to exercise jurisdiction, draft regulation § provides that the DGFT will refer the dispute to the Secretary of State for determination. The competent persons concemed may make representations to the Secretary of State. Encouragingly, the proposed timescale under the draft regulation for the Secretary of State to reach a conclusion is tight: eight working days fom refecal of the issue. The Secretary of State will then inform the relevant competent persons and any applicant who is to exercise Jurisdiction, [PO] CTL ISSUE | SHEET 8 AXWELL UMITED AND CONTRIBUTORS)OPINION : (2000) CTL. 5 ‘The draft regulations do not set outthe factors which the regulators, the DGET and the Secretary of State will take into account in agreeing or deciding who Is to act, although a number of respondents to the D's consultation had asked for them to do so. The flexible arrangements set out in the concurrency guideline and outlined above will therefore anply.It should be noted that, while an undertaking may have a preference as to who should handle its application, there is no formal mechanism for its view to be given or aken into account, In practice, an undertaking which believes that its application may be subject to the jutsdiction of more than one competent person would be well advised to make an informal approach to the DGFT and the regulators concerned, with a view to determining jurisdiction, before actually submiting its formal application, The draft regulations provide for the disclosure of information and agreement ot determination of the exercise of prescitbed functions in respect onfy of applications actually made, and not in respect of such prospective approaches. The constrain:s on the disclosure of information could be overcome by the prospective applicant voluntarily submitting the information tp the DGFT and all the regulators con- cemed, butthe draft regulations might usefully be amended slightly to make itclear that the mechanisms may be triggered by genuine pre-notfcation approaches. Eliminating Double Jeopardy ‘The main concern of many businesses in the regulated sectors has been that they will face double jeopardy at the hands of more than one regulator, or of the DGFT and one or more regulators, Draft regulation 6 allays this cancem, providing that ‘where there may be concurrent jutisdiction, no competent person may exercise any prescribed functions until it has been agreed or determined who will do so, Furthermore, once it has been agreed or determined which competent person will exercise prescribed functions, no other may do $0. Transfer of Jurisdiction Cases may be transferred from one competent person to anathes, The transferor will inform the undertaking concerned that there has been a transfer. Borrowing Staff Draft regulation 8 provides for one competent person to appoint an officer of another competent person to act as his ofticer, subject to the consent of the lender ‘The craft regulation therefore specifically addresses the obstacle to borrawing staff to camry out investigations mentioned above. It provides that the borrowed offcer isto be an officer of the borrower for the purposes of the provisions of the C.A. 1998 relating tw investigations. The main impact of this provision in the tele- communications sector is that the DGT wil be able to call on specialist OFT investigators, who ate likely to be more experienced and better trained in search. techniques, including the use of search software. It will also allow the OFT, for example, to borrow OFTEL staff to assis it in a mixed telecommunications and 17. case. ‘The fact that an officer has been borrowed will not be disclosed to an undertaking involved in an investigation. As far as itis concerned, the borowed officer will be an officer of the borrower. Joint Working Other than borrowing staff, the draft zegulations do not make provision for joint rking. The explanatory note states “the Government agrees with the view that itis too early 10 set out clearly how such joint working would operate and that the issue should be revisited after there has been some experience of handling cases” While it may be sensible to hold back on the detail of how joint working is to operate, the draft regulations leave unanswered the immediate question of whether joint working is perraitted at all. In the abserice of provision, the DGFT and the regulators may consider that «cases raising issues beyond the jutisdiction of a single regulator (such as the telecommunications/rail example outlined above) can be handled only by the DGFT, with any necessary sectoral expetise being brought in by means of officers bostowed from the relevant regulators. 'This is not necessarily the most efficient way of handling cases. Its in the interests of businesses submitting notifications (tba cin SUE 1 SHEET & MAXWELL UMFTED AND CONTRALTORS)6 OPINION : [2009] CLA. if not of those facing complaints and own-initiative investigations) that the full resources of the regulators should be available, rather than a piecemeal second- ment of staff. Conclusion The draft regulations ate a useful piece of the C.A. 1998 jigsaw. Although in practice it's unlikely that there would have been turf fights or double jeopardy in the absence of co-ordinating rules, the draft regulations should increase certainty and transpazéncy and promote confidence in the concurency artangements. A less satisfactory aspect of the draft regulations is the absence of provision for joint ‘working. However, the possible shortcomings In relation to joint working will not Gisguise the fact that from March 1, 2000, OFTEL will become a competition authority as well as a regulator, with powers to conduct unannounced on-site investigations, to order termination of inftingements without going through the cumbersome licence enforcement procedure and to impose heavy penalties. Those operators which have less than amnicable relations with OFTEL. are likely to notice the difference. Peter R, Willis Taylor Joynson Garrett, London [P00] CLR RSLS 1 @ SWEET HARWELL UMTED [AND CONTRIBUTORS~ LE-GOUEFF : THE DRAFT LUXEMBOURG E-COMMERCE LAW : [2000] CTLR. 7 THe Drarr Luxemsoursc E-ComMERCE Law STEPHAN LE-GOUEFF LE-GOUEFF@ vocats com: Z The Luxembourg draft law on electronic commerce published in April 1999, aims at creating a favourable environment for e-commerce in Luxembourg. The introductory comments t0 this draft law contain an assumption, an observation and an equation. “The assumption is that e-commerce is good and that what {s good for e-commerce is therefore good for Luxembourg, AS others have already explored the issue, this paper will not get into this discussion. ‘The observation is that e-commerce is not taking off due to a lack of user confidence. ‘This ebservation is not without metit. Reseazch carried out, by Consumer International (a federation of some 245 con- sumer associations) on 150 e-commerce purchases in 17 countries found that: © 8 per cent of the goods purchased never arrived; @ 47 per cent had no cetumn policy; and © only 15 per cent undertook not to transmit personal information to third parties. addition, VISA: has indicated that 47 per cent of its tigation stems from Internet-related frauds. ‘Thus the eguation contained in the draft law is that security = confidence = development of e-commerce. Accordingly, the main aim of draft law is o create a secure environment for e-commerce, It does so essentially by grant- ing legal recognition to electronic transactions. Moze specii- cally, the draft law addresses: © encryption; # electronic signatures; and @ electronic documents, Encryption ‘The draft law adopts a simple and open approach regarding encryption, which may be used freely. In Luxembourg, unlike some countries, there are no restic- tions on the type of encryption systems which may be used, nor is there ary requirement to deposit with a public officer the Key to decrypt a message when required by the compe- tent authorities (as is the case in France). Since Luxembourg, is net a producer of encryption systems, itis not surprising that there are no restrictions on the import or export of such 1 Suéphan Le-Gouet, works for LE-GOUBFF@vocats,com law fim in Luxembourg. He is also a member ofthe Legal Advisory Board of DG 15 (information Society) of the £,U. Commission, a correspon- ent wo the Computer and Telacemmunications Law Review ata Vice-President of the Mulimedia Commission of the European Lawyers’ Union. He Is admined to practice law in Luxembourg, Pacis, New York and Montreal systems (the U.S. restricts the export of the most secure encryption systems) Recognising E-signatures ‘The draft law gives e-signatures 2 functional and technically neutral definition. An e-sign should identify the holder and guarantee the integrity of the document to which it is attached; thats, itis a sign that the document has not been altered. In addition, it should be created by a device that the signatory can keep under its exclusive control > ‘Adopting such a definition is good, since any specific type of signature mentioned in the draft law would inevitably be outdated before the draft became law. The law would there- fore always be lagging behind the evolution of technology. However, the downside is that the definition leaves a lot of, room for interpretation. It is likely, in those circumstances, ‘that the matter wil be brought before the tcibunals and that it will be left to the couns to decide whether @ given type of e-sign technology meets the requirements of the law. ‘While the existing definition should be maintained—as it provides for an evolutionary framework—the draft law could nevertheless be improved by finding a way to determine easily which typeof e-sign should be recognised at any given pointin time. One possibility could be to leave this task to the Autorité Nationale d’Accréditation et de Surveillance (ANAS), which the draft law intends to establish. Automatic recognition of the e-signature will only be granted if, in addition to fulfilling the above conditions, it rests on a qualified certificate (“certificat agree") issued by a certification service provider (CSP). If no such certlicate is attached to the signature, i will not automatically be recognised. It will be for the parties to argue and for the tribunals to decide whether it meets the conditions ‘set out in the law. ‘The logic is understandable. As the draft imposes a certain number of obligations on CSPs to ensure that an e-sign is indeed the signature of a given person and to warrant the integrity of a document, itis not necessary to enguire further. The qualified certificate demonstrates that the signature Is valid. Where, however, this is not the case, while the signature cannot be rejected because itis in electronic format, it will only be admitted if it can be pesitively demonstrated that the conditions set out above are fulilled. However, how does the system work in the international context in which e-commerce takes place? Unsurprisingly, the draft law states that qualified certiicases issued by CSPs within the European Union will be recognised in Lux- embourg.* This is not, however, the case for certificates 2 Ant. § of the draft law. 3 an i7 4 (oO CTR. SE 1 SWEET MASEL UMITED [AND CONTRILTORS)8 LE-GOUEFF : THE DRAFT LUXEMBOURG E-COMMERCE LAW : [2000] CLLR, delivered by non-EU, CSPs. A qualiied certicate issued by a non-E.U. CSP will only be recognised in Luxembourgiif one of the following conditions is fulélled®: the non-£.U. CSP complies with the conditions set out in the draft law and has been approved in another E.U. member State; # an EU. CSP warrants the certificates issued by the non-E.U. CSP: ot © the non-E.U. CSP is recognised in a bilateral or inter- national agreement to which Loxembourg is party. In practice, very few users ate likely to go to the trouble of finding out whether these conditions have been met and whether the certificate issued by the non-,U. CSP is worth the paper it's printed an. This situation needs to be rectified. Users in Luxembourg must be able to find out whether the signature of a non-£.U. counterpart can be trusted and given legal recognition quickly and easily. A constructive proposal ‘would be to require a public authority, perhaps the ANAS, to satisfy itself that the conditions set forth in the law are complied with end to publish from time to time on its website a list of recognised non-E.U. CSPs. CSPs and Qualified Certificates The draft law provides that there can be two types of CSPs: those that are approved by the ANAS; and those that are not. ‘The ANAS will only grant its approval to CSPs which meet cenain requirements specified in the draft law. A qualified certificate is one which Is issued by a CSP which satisfies certain security and trustworthiness conditions to be specified in a regulation.* Thus, it seems that both types of CSPs (@pproved and non-approved) may issue a “qualified cerif- cate” which, as indicated above, wil grant automatic legal recognition to an e-sign. This gives rise to a somewhat confusing situation, There can be five types of electronic signatures: © without a cerificate; © with a certificate issued by a non-approved CSP; © with a certificate issued by an approved CSP; 5 An 34. 6 Ant 30. ‘© with a qualified certificate issued by a non-approved CSP; or with a qualified certificate issued by an approved CSP. Only the last vo would be granted automatic recognition. 1n any event, it is not reasonable to expect that users will understand the subtle, distinctions between the different types of signanure. Simplification would be welcome. Recognising Digital Documents ‘Another ofthe iaw’s major achievements isto give toa digital, document bearing an electronic signamre the same legal value as an orginal (paper) document bearing a manuscript signature, provided that it presents satisfactory warcanties, regarding the maintenance of its integrity as of the date of its creation.? The intent is that the digital document will only be recog- nised if it can be shown that it has not been. altered since it has been electronically signed. As indicated above, using a technelogically neutral defini- tion is helpful. However, how does it work in practice? How will one determine whether an e-document “presents sat- {sfactory warranties regarding the maintenance of its integ- tity as of the date ofits creation"? ‘Again it falls to an authority, perhaps the ANAS, to tall users which technological solutions meet the requirements of the law. Conclusion The draft law goes a long way towards achieving its objective. to grant recognition to electronic transactions by accepting the use of encryption and by granting legal existence ta the e-signature and e-document. However, some uncertainties remain. ‘A balancing mechanism needs to be found to enable users to determine, without having to conduct a legal and technical analysis, the value of the electronic signature, qualified certificate and digital document of his/her counterpart for both national and international transactions. IE this is not done, the legislator will have no choice but to delegate its decision-making power to the judiciary, which will ultimately be called to fill the gaps left in the law, This will of course take time and cost money. In the meantime, the result may well prove to be the opposite of that sought by the draft law: uncerainzy. TAR 6. (Bo CLA SUE 1 SWEET & PUOLWELL LMITED {AND CONTRIBUTORS)\ TIMM : THE TRANSFER OF TECHNOLOGY DIRECT REGULATIONS IN BRAZIL [2000] CTL. 9 THE TRANSFER OF TECHNOLOGY DirECT REGULATIONS IN BRazit—Parrt [ll LUCIANO BENETTI TIMM Z CRISTOVAO COLOMBO, ULMANN, MATHEUS E MILLER ESCRITORIO DE ADVOGADOS S/C, SAO PAULO LECTURER AT PONTIFICA LINIVERSIDADE CATOLICA (PUCIRS) SAO PALILO The New Brazilian Antitrust Model with Respect to Transfer of Technology ‘The new antitrust law regime zepresents the latest chapter in the history of Brazilian legislation with respect to technology transfer regulation. However, before we look at how this system should operate, an introduction to Brazilian competi- tion law is essential. In Brazil, competition law has a brcader meaning than it has in the developed world owing to the peculiarities of Brazil's market and its legal history. General Aspects of Competition Law in Brazil: A Binary Root The fact that the Brazilian legal system has adopted the “developed” world approach to technology transfer regula tion does not mean that Brazilian anticrust legislation has to hhave the same goals as the developed world, As @ matter of fact, Brazilian antitrust law has its own history and was developed to tackle the problems arising out of Brazil's specific economic and politcal situation. Different legislative models were transplanted and adapted to the national legal framework. Since the object of the regulation, fe. the marke, is different in Brazil itis natural that the purposes of the legislation reflect that diversity. Naturally, the market in Brazil differs from that found in the United states or Europe.’ Brazil has a completely different economic history, with a strong heritage of colotialism and, more recently, of protectionism of national industry, com- posed primarily of totaly-owned subsidiaries of multinational corporations. Thus, in Brazil, the role of competition rules is above all to prevent multinational corporations, which are normally Keen to use their dominant position through their subsidlartes in order to guarantee easy and high profits in a relatively weak domestic market, from abusing their eco- nomic power. The likelihood of distortion is even higher with respect to tademarks, and patent and technology tansfer agreements, which may serve as a disguise or @ shield for anti-competitive practices.* Naturally, the aims historically found in antitrust regimes in European countries and the United States are also present in Brazilian competition law, te, regulating market structure and preventing unfair com petition, 1 For an in-depth discussion of the Braziian poical and economic situation, see Forgioni, Aundamentos, p. 10. 2 A simple look at CADE'S case law suggests that 2 considerable ‘murber of multinational corporations are under investigation for economic vations; see mj gov.br/cade 3 The guarantee of efficiency does not mean, by implication, the ‘uaranize of consumer maximum satisfaction since ony monopolist Broducers cen reap al the benefits ofthe increase In productivity, For a full exploration of the Chicago School paradox, especially as ft telates to Brazi, see Calisto Salona, Diteito Concorrencial (1987, Malheiros Ector, Sao Paulo) Indeed, like other antitrust regimes, the Brazilian com- petition system aims to protect competition and market structure (consumers and efficiency). On the other hand, the specific nature of the national market explains the strong, commitment of Brazilian competition law to addressing unfair commercial practices and consumer provection (e.g. contol of prices), which are not normally found in places where enterprises face a lot of competition within the marke. In 4 Unlais competion is also fotbidden by An. 198 of the new {odusical Proper Code “Amide 195—An act of unfair competion ts commited by any petson who publishes. by any means, a false statement, detrimental to 2 competi simed at obtaining an advantage; provides or publishes false information with respect to conapetitr with a view to obtaining an advantage: —use fraudulent means to diver the customers of another rub ne oun po note pany ott 1IV—uses the advertising expression orsign of anather person, or initaces it, im a manner able 1D cause confusion between products of establishments, ‘Ve-makes undue use of another party commercial name, tile of establishment or insigna or sells, exhib, offers for sale or bas in stock a product bearing chese references: ‘Vimeplaces on the product of another person the name cr company’ name of such other person, without fis consent with his ewa name o- company name: ‘Wi—dlaims, as means of advertsing to have recelved a prize ot distinaion tat he has nor acoually Seen avarded: ‘ill—selsorexhibits or offers forsale, inthe container or packing of another an adulterated o flsiied product, or uses such container or packing o wade in a product ofthe same type, even Enotaculwrated or fase. if such act does net costiute& more serous offense. DK—gives of promises money or other consideration to an employee of a competitor in teram for which such employee filing hi duces under his employment, procures him at advantage; X—recelves money or other consideration, ov accepts. promise of Payment or reward In rerum for procuring an advantage for @ ‘competitor, faling his dutes under his employment ‘Xi-aiscoses, exploits or uses, without previous consent. can- ‘idential knowledge, information or data which may be used in Industy, commerce or service rendering, except where such confidential knowledge, information or data are, in the public domain orate obvious toa person sil in the at, to which be thas had aocess due toa contractual or employment relationship even afer tecrnaton ofthe contract Xll—aiscoses, exploits or uses, without previous consent, such Knowedge or infomation tefered to in the prececing iter ‘gbtained by Uict means of to which he has access by fraud or 2M—sells, exhibits or ote forsale a product which he wrongly declares tobe subject of patent fled or granted or ofa registred Industdal design of who wrongfully states in commercial announcement or paper that such product bas been fled or patented, or registered: xdV—Aivulgs, exploits or uses without authorization, the results (of wsts or ether undisclosed data the elaboration ‘involves a ‘considerable effor and which has been suomited to governement ents a5 + condition for approving the marketing of prod- cs.” [ane] CLA SUE (© SWEET a MAXWELL LIMITED AND CONTRIBUTORS)410 TIMM™ ; THE TRANSFER OF TECHNOLOGY DIRECT REGULATIONS IN BRAZIL : [2000] C.T.LR. fact, the Brazilian Constitution® and antitrust laws are come ‘mitted to fair and ftee competition® and consumer protection” as well. Indeed, economic power can interfere in the consur- er’s choice, create bartiers.to competition and may allow the practice of abusive prices, ete. ‘The nature of the domestic market, which resulted in concems about the structure of the market and faimess in ‘commercial practice, also indulced the legislator to borrow Jaws from different legal systems. The legislatcy, intention- ally, or not, probably believed that by doing so all weak- nesses in the matket could be reached by the legal system. Hence the commitment to market struczure comes from the Sherman Act (and European Unicn) infiuence,? whereas the idea of faimess was transplanted from the first German competition statute—the UGW (Gesetz gegen den unlauteren Weutbewerb}—which basically protected ethics within the market.” Itmay be true that most ofthe federal antitrust laws were transplanted from the Sherman Act (although European law, in the form of new competition law No. 8.884 did have a significant infixence, as has been observed elsewhere in this ‘work).!° Nevertheless, the history of competition regulation id not begin with those pieces of federal legislation. Con- versely, itis linked with the Brazilian Constitution of 1937+ and with Decree No, 869 of November 1938 (which regulates the provision defining crimes against the popular eco- nomy).!? Both these stand completely apart from the Amer can model of antitrust; indeed, they are closer to the German tradition." Therefore, both federal antitrust legislation and the constitutional and federal law provisions about the pop- ular economy represent the legal framework behind the formation of Brazilian competition law. enaly—impsonment, fom 5 (hee) most tot foe) yet or fine. ‘The ctference berween the anticust provisions and the indastial Code seems to be that in the former a harm in the strucure of the rmarket is needed while in the later the practice is assessed fegaidless of any conipeition law requirements, 45 Constitution, Art 170, 1V and V (Principles of economic onder: {fee competion and consumer protection), repeated in Art 1 of the new Act 6 Free Competition in the sense of équality of competition's mini- mum conditions, £¢. freedom of access and to stay in the rake. ‘See Cabo, Direiza, 0.32. 7 Gonsumer protection méans net only eficiency, but also guacan- teeing the dsttbution ot the benehis benveen producers and consumers. Soe Calbto, Dito, at p. 33. 8 According to Calisto, a clear concern in defending competition as ‘a mieans to protect consumes underies the Sherman Act. This can be seen In the speeches of Senator Sterman at the time of the passage of the Bill Dittvo, at p. $4, For more detail sce Calixto, Direito, at p54. 9 See for instance Arid 1 fthe UWG, which deems illegal any act against good corumercal practices: Calisto, Ditet, at p. 53. 10 For an in-depth disossion about the actual sourges of Brean ant-must laws, ee Fowgion, Fundamentcs,p. 87. She claims that the new competion law 8684/94 was more influenced by the ‘Tea of Rome than by the Sherman Act 11 Are 141 ofthe 1957 Constitution: “The legislation wil promote the popular economy... the crimes against the popular economy ate crimes against the Sate..." 32 As a matter of fc, that Law (s considered the fst antitst lave {in the country, See the words of the Minister of Justice a che time cf the passing of the legislation in Congress: "The secoad goal of legslaion is to avoid the block of competition by means of agreements or underalings that aim at cating monopolies or retaining free competion..." Sheiber Aduso da Fader Econom. 100..4 13 Calisto, Ditto, a p. 68. The protection of faimess was confxmed in Article 2, section ¥ of the first formal antitrust law, Law 4137 62 the whole of which was heavily influenced by the Sherman Act. This Law looks not only at uniair competition, butalso takes into account the prevention against the economic power, 2. undue constitution of a dominant position (section 1) and the abuse of a dominant position (sections Tl, Ml and 1V). Law 4137 wes passed to regulate the broad provision of the Constitution of 1946, which aimed to tackle the economic, power. Hencr, ittook more than 15 years for pactiament to approve a law that applied antitrust rules, the Administrative Council of Economic Defense (CADE) and the definition of abuse of economic power’® as well, In 1946 Deczee-law N. 7903 was passed to regulate the crime of unfair competition. ‘Then, both aspects of Brazilian competition law find regula tion in federal iegislation. This is the legal background for the 1988 Constitution and the new competition law introduced in, 1994, Atticle 173, pata. 4 of the 1998 Constitution, also aims to control the abuse of economic power through domination of the market, the-elimination of competition and arbitrary Increases in profits. The new legislation, Law 8884/94, was passed t comply with that new constitutional provision, Article 20 basically repeats Article 173, para. 4, which calls “violation of thé economic order” the abuse of economic power by which firms violate competition and the structure of the fiee macket, The novelty is that no reference is made 10 unfair ‘competition asa type of economic viotation.** Indeed, unlike that Law (1962), Article 20 of 8884/94 Law does not define unfair competition as a viclation of the economic order and thus an abuse of economic power. This fact makes some of the anti-competitive practices listed in Asticle 21 awkward since some of them were copied from Law 4137/62 in which they were identified as unfair comperition practices. Fur thermore, the double root of national law explains to some extent the perplexity of those foreign lawyers who try to interpret the Brazilian anti-trust legal regime just through competition laws or even through the Constitutions, without beating in mind that the link with domestic iaw includes not only the American law, but the German as well 17 Law $884/94 follows the pattem of American and ‘Buropean antizrust laws, which nommelly divide competition rules according to the particular situation they aim to reg- ulate. The first cranche is dedicated to regulating the abuse of 14 Ar, 148 of the 1946 Constnation provided thatthe eww would forbid the ebuse of the economic gover by any undéraking that sought to dominate the starke, eliminate competion and abitarly inrease is profits. 35 EV, Coelho, Direito antiruste braseio (1995, Saraiva Eatora, Sie Paulo, 16 The answer tothe question why didi happen is open to debate. alia blames the inaccuracy ofthe lessazrs. See Calista, Dirt, 2.60. 17 Dallal stevens, on. oft. p. 945, commenting on the new competition law says that Ar. 21 lists a number of acrs deemed “unlawfal which seem difcul to interpret. in addition, some of the ‘wording is unfamiliar to anctust lawyers, Furthermore, there are @ hnumber of rather incongruous listed practices. For instance, Arle 21, Section IX, *to affect third party prices by decetfl means” is @ typical unr competition provision within Brazfian competicion ‘ay that can not be found in other ancirust laws. See aso Wii Page, Antirast review of mergers in ranstion economies. a covi- ment, with some lessons ftom Brazil [1998] Universtey of Cin- cthnaet Law Review 1113. [00] TLR SUE | © SWVEET & MAXWELL LITED [AND CONTROUTORS)‘Tho : THE TRANSFER OF TECHNOLOGY DIRECT REGULATIONS IN BRAZIL : (2000) TLR. 11 monopolies (Sherman Act, Section I), or firms in a domi- nant position (Treaty of Rome, Art. 86*°), which can be found in Article 20, Sections Ul and IV. The second érancie tackles horizontal and vertical agreements that might harm competition within the market (Sherman Act, Section | and ‘Treaty of Rome, Art. 85(1)), which can be found in Article 20, Section 1. Jn faci the new law, following the two-pronged approach ‘of American and European law, tackles the abuse of 2 dominant position through Artide 20, IV, which must be read together with Article 20, Il, paras. 1 and 3.?° This states that the assessment ofa dominant position is relative and depends upon the definition of the geographic and product market, te, the relevant market. Once 2 relevant market is found, one must fook at the control of that market, which means analysing how the behaviour of a particular enterprise affects other pacticipants in the matket. Dominance is presumed where tae enterprise has a 20 per cent share in the market?" The distinction is made between the right and its exercise Economic power is not illegal by itself; indeed, it may even be natural. What is forbidden is its abuse as defined by law. At this particular point of discussion about relevant market and economic power, intellectual property rights pose 1 special problem to antitrust law. There is a strong probabil- ity that the monopoly to exploit the economic benefits of an invention granted by the patent office to the intellectual propery sight holder would guarantee him a dominant position in the market of that product or service. A monopoly may provide an incentive ot encourage innovation, progress or efficiency, but it mast not dominate the market and harm competition.?® In addition, one must bear in mind that today’s innovation market tends to be imperfect, since only big companies can afford the costs of research and develop- ment. However, this economic power cannot simply be 428 “Every person who shall monopolize, oratempeta moopolze, of combine or conspite with any otter petson or persons, 1 ‘monopolize any patt of the rade cr commerce among the several states, ot with foreign nations, shall be deemed guity of a fel ony. 2 19 “Any abuse by one or are undertakings ofa dominant postion Within the common marker or in a substantil part of it shail be prohibited as incommpacible with the common matke: in so ar as it may affect rade between Mercber States.” 20 Ar. 20 “Noswithstanding malicious intent, any actin any way intended or otherwise able to produce the effexs listed below, even any such effexs are not achieved, shall be dated a vsladon of ‘he economic policy: Ute dominate a relevant market or a certain product ot serv- te Ivo abuse of a dominant position, §,2°. Achievement of market contol as 2 result of competitive affciency does not ental an occurrence of the ‘ice act provided for in item 11 above; § 2°, Dominant position occuts when a company ot group of companles contals a substantial shate of a relevant matket as supplier, agent, purchaser o firancier of a product, sevice ot related technology; § 3°. The domiiant postion mentioned in the preceding para- ‘gaph i presumed when a company or group of companies onols & subsrartial share of a relevant market as supoler, agers, purchaser or financier of a product. service of related sechnology.” 21 Coelho, ap. cit 22 WR. Cornish, dncellectual Property: Patents, Copyright, rade Marks and Allied Rights (1996, Sweet & Maxcwell London), p. 30. Romario Subioto, Cleary, Goties, Steen and Hamilton *Technolagy licensing: the E.G & US. res compared”, speech at the anrvial conference ofthe European solicitors” Group in june 1995, papet unpublished, Copy provided by Dr Dalal Stevens. assumed: it must be tested according to the principles of competition aw Market analysis means considering supply and demand with regard to similar products.** Hence, a dominant position ‘means domination over all the relevant market, which includes substitutable products or services to those protected by the grant of the intellectual property. Once a dominant position is achieved in the relevant market, one cart not abuse it. Underiying this idea is again the distinction benween having a right and exercising it bearing in mind its social function (as explained in Part 1).*® Assessment and regula- tion of the economic power guaranteed by an incellectual property right is expressly authorised by Article 21 of Law 8884 (which gives some non-exhaustive examples of unlawful economic violations), Section XVI? This should be read together with Article 20. On the other hand, formal and informal agreements that harm or potentially harm the relevant market through verti- cal or horizontal restraints are prohibited in Article 20, Section F” combined with Amticle 54.28 Article 20 must also be read together with Article 21, Section XVI. Technology transfer agreements might fall within this category: see under the next heading, below. Finally, pursuant to Article 54, the CADE can authorise some anti-competitive prectices, provided they confer the economic and sovial benefits listed therein, Some authors? call this a “rule of reason” test applied by the antitrust agency, because they see similarities between this assess- rent and that carried cut by cours in the United States, as, described in Part I. Others** prefer to avoid using terms 25 Indeed, the 1998 U.S, Guidelines cted above stare that intelec- tual propery rights do riot necessarily confer marke: power. The comer of an iilletual propery right may be only one of many owners of compatable intelectual property. Also, the products tesulking from a speci intelecval property may represen: only @ small pact of the product in the same product market. They also state that technology lcences are generally pro-competive because ‘they normaly facilitate toe combination ofthe licensors intellectual propery wich complementary factors of production. See Romano Sublowo e¢ a. op. cit 24 A, Fonseca, “novation competion and tnelleccual prop- (1997) Aug—Dee, R. Diz Econ, 85, Bauna, op, cit. p. 75. 25 see also Brazilian ‘Constitution, Am. 5, Sections 2001 and sean. 26 Amt 21; “The acs spelled out below, artong others, will be deemed a violation of the exonomic policy, to the extent applicable ‘under article 20 and tems theref:... to fake possession of or bar the use of indwssial or iniellecnial prgpery righ or technology". 27 Amt, 20:*.... 110 limi, restrain or in any way igure free ‘competition or de emcerprise”, 28 Ant. S4: “Any acts whassoever that may limit or ethenvise ‘restrain free competition, or that resut th damttration of relevant markets for certain products or services, shail be submitted to CADE or review. § 1° 0 CADE may authorise the acts referred 10 the main section of this article, provided thar they mect the Slowing requvements: Poth shall be cumulative or altemativey intend 2: &) increase proauctivign 2) improve the quai ofa product or service: or 6) ease an increased efctenay, as well as fester the techno- Legical or economic developments ‘=the resultng bengits shail be ratebly [sc] allocated among ‘their participants, on the one par, dnd consumers oF end-users, an che other ‘MHin-they shall not eliminate competition ofa substantial portion of the relevant market for a product or service; and Weonly the acts sirtly required to atain an envisaged objective shall be performed for that purpose.” 129 Coelho, op. cit 50 See, for example, Sv. Bruna, “O poder econamica € a can- eituacdo do abuso em se exerci” [1997], Edltora Revista das ‘ibunats Sao Paulo 176, [BEG] CLUE © SWEET & HARWELL LIMITED [AND CONTRIBUTORS]12 Tit : THE TRANSFER OF TECHNOLOGY DIRECT REGULATIONS IN BRAZIL + (2000) CTLR. which belong t» another legal system, which are created to solve particular problems faced by foreign courts with regard to the interpretation of their domestic statutes, such as that of Section I of Sherman Act, and which are not necessarily presented in domestic legislation. These scholars tend to place abuse of economic power in the general category of abuse of rights rather than the rule of reason, as demonstrated in Part 1, They argue that once an anti-competitive practice fulfls the requirements of Anticle 54, it cannot be deemed an abuse of rights: in those cases, the economic order is not being, violated because there ‘are economic benefits, such as increased productivity. Moreover, the criterion set cut in Article 54 appear to be broader than the American test (sce below). Indeed, whether this procedure is described as a rule of reason test or an abuse of rights assessment, according to Anticle 54, the CADE must assess gains in productivity (para. 1, Section I, item a) or efficiency (para. 1, Section I, item 0}, cr even the improvement of the quality of goods or services involved in the transaction (para. {, Section I, tem b). It shall also consider the equal distribution of the benefits of the operation for the demand and supply side of the market (para. 1, Section O). The CADE rust caleulate the tisk of eliminating competition within the relevant market, Last but not least, the CADE shall bear in mind if the enterprises involved in the agreement ate using no more than the means necessary to achieve their purpose (para. 1, Section TV). Once the legal framework is understood, one can look at Row it applies to technology transfer agreements. Application to Technology Transfer Licences The firs point to clarify is the purpose of antitrust control in, intellectual property law, particularly in the context of con- twacts for the transfer of technology. In order to do that, one must draw a line between intellectual property rights and their licence or transfer. The first is a right over things (property rights) and is protected separately in the Constita- tion and other legislation (the new Industial Property Code, mentioned above}. The second must be linked to the general principles of contract law. This distinction is important Because for each of those branches of private law (property and contents) there will be found a proper provision of antitrust law. With property rights, there is more likely to be an abuse of a dominant posttion to which Artcie 20, Sections 1 and IV of Brazilian antitrust law will apply. Contractual licensing or transfers are more likely to involve a vertical or horizontal restraint under Section | of Article 20. Indeed, there is a proper field for each one of those different legal relationships: the contractual one and the proprietary one, The legal relationship derived from intellec- tual property starts with the grant ofthe patent by INP and 31 Art. 2—"ln view of te Inseresc of soclety and the technological ‘and economic development of the country, the protection of rights relating to induswial propery shall be assured by means of thie grant of patents for inventions and for utility models: ‘the grant of industrial design cegistrations; ithe grant of tademark registrations IW—the fepression of fase geographical indications; and ‘he repression of unfair compesiion.” ‘Ar, 38—"A patent shall be granted once the application is allowed ‘and, after proof of payment of the coresponding fee's furnished, the respective patent certificate shal be issued.” Ar, 129—"Ownership of 2 mark shell be acquired ty @ valid regiswration pursuant io the provisions of this Law: the owner shal have exclusive use of she mark chroughcue the national veitory, ‘without prejudice of the provisions of Ams. 147 and 148 with ‘respect to collective and certfieation marks." is established, ike any other legal relationship, berween two poles (persons) over an object. Among the powers encom- passed by the intellecusal property right is the potential to exploit economically the benefits thar the invention brought to the market. Because it is economic in essence, the legal system admits the licensing of this power to exploit the invention to third parties? If the proprietor decides to transfer its right, another kind of legal link is formed and the contractual relationship begins. Transfer of technology agree ments could be considered as falling into the latter Category. Therefore, the problematic clauses* of technology transfer agreements should be logically linked with the principles of contract law, and partes that enter into this sor of agreement, ‘must take into account the provisions of Article 20, Section 1 and Article 54 of Law 8884/94, ‘The most problematic clauses with respect to anti-com- petitive measures are: grant-back clauses,%* post-expiry pro- visions, mo-ciallenge clauses*%, tying arrangements*; competing technology provisions; price-fixing arrange- rments*; volume restrictions; field-of-use restrictions*; pack- age licence®; non-competition clauses; export restrictions; cross-licensing®; and pooling patents.‘ Thus, horizontal or vertical technology transfer agreements that contain clauses restricting competition must be notifed to the CADE and pass through the antitrust balance test of Article 54.1? As stated in 32 See the new Industral Property Code, Article S8—"A patent appficaton ora patent the contents of which are indivisible, may be assigned in whole or in pat." Ar. S1—"A patent owner ot applicant may execute a licensing contract for exploitation." ‘Ar. 62—"lo produce effects regarding third parties 2 licensing contact must be recorded with INPL" For other cights confered by lar, see: ‘Att 41—"The scope of the protection conferred by the patent shall be dezermined by the terms of the dais as interpreted on the basis ofthe deseepion and the dawings.* ‘Art 42—"A patent shall afford tits owner the right to prevent others fom producing, using, offering for sale or importing for such purposes without his consents" Ari 44—"A patent owner shall be entitled to compensation for unauthorized exploitation of the subject matter of his patent, Inchiding exploitation tht oceus between the date of publication of the application.” 135 The most problematic dauses with respect to anit norms are: grantoack clauses: postexpiry ‘provisions; no-chalenge causes, ing amangements, competing technology provisions: price-Bxing erangements; volume restrictions; feH-ofase restic- tons; package licence; non-competion clauses export retritions, ‘These problems could be overcome if the Act required a nexus between the maker of the original Y2K IDS and the 15 See ss.3(5). 3(9), 4(a) and 4(b) of the Year 2000 Information and Readiness Disclosure Act 1998. [Roto] CLR. Issue 1 @ SWEET & MADWEL LMITED [AN CONTRIBUTORS)20 GRAY AND DE SILVA : AN EXAMINATION OF NEW ZEALAND'S YEAR 2000 INFORMATION DISCLOSURE ACT : [2000] C.TLR. business, goods or services which are the subject of the statement in order for the statutory protection to apply. Another possible option could have been a requirement that a Y2K IDS would only qualify as a ¥2K IDS made under the Actif it is made in good faith, or mace for one of the stated purposes of the Act. Potential Liability under Commerce Act 1986 Both the Commonwealth Year 2000 Information Disclosure Act 1999 (“the Australian Act”) (8.17) and the Year 2000 Information and Readiness Disclosure Act 1998 (“the U.S. Act”) (8.5) recognise that in order to gain effective Y2K. information, it may be necessary for competitors to exchange information in a manner which might create ability under statutes which protibit anti-competiive conduct. Both the equivalent Australian and American statutes offer a restricted, temporary exemption from the rigours of competi- tion law. In each case, the exemption is limited to the work to be carried outin order to issue Y2K IDSs, and is effective only for the periods of protection offered by the statutes. The Austtalian provision which protects waders that co-operate to produce Y2K IDSs appears to be intended to enceurage industry members to share information. In the absence of a similar provision, New Zealand traders that co-operate to produce Y2K IDSs risk breaches of: «@ section 27 of the Commerce Act 1986 which prohibits contracts, arrangements or understandings that have the purpose or effect (actual or potential) of substantially Jessening competition in a maciet; and @ section 29 of the Commesce Act which prohibits conttacts, artangements or understandings between competitors which have the purpose of exeluding other competitors. Section 36 of the Commetce Act prokibits persons who have a dominant position in the market from using that position for lessening the competitive ability of a smaller competitor or for preventing or deferring potential competitors from entering the market. For instance, if a dominant company in the market issues a Y2K IDS about its competitors, which results in decreased demand for the competitor's goods or services, there may be labilicy under section 36. These risks are not addressed by the Act, Even if a Y2K 1S itself cannot be admitted or used against the person who racle or republished i, there fs sul @ Teal risk that anyone Who collaborates could be attacked for the conduct which led w the joint Y2K IDS. Industy comment on the ¥2K IDS (or lack of Y2K IDs) of a competitor or supplier would risk investigation by New Zealand's Commerce Commission. There may also be a posshbility of information sharing leading to allegations of price fixing (if prices are later shown to be the same or similar). Traders that contaavene the Commerce Act risk both prosecution by the Commerce Commission and exposure to civil liability. Even if the moze general provisions of sections 8 and 9 are found to be effective, the cost of litigation or threatened litigation would be high. Reliance on Disclosures by Suppliers One of the principal aims of the Act is to help enable businesses to put adequate contingency plans in place and to ensure business continuity without interfering with existing contractual rights. To do this, a business may need to cancel long-term contracts with suppliers. For example, a supplier may make a ¥2K statement from which it is clear to the customer that the supplier will not be able to supply after January 1, 2000 (ée. there is an anticipated breach of the contract). The customer will need to be entitled to rely on the ‘Y2K statement to show that it was entitled to cancel its long- tem contract, The Act does not allow this. The customer would not te able to produce the Y2K statement in evidence in any claim by or against the supplier. If customers are not entitled to rely on the statement to justify cancellation, there is 2 risk of a domino effect where the failure to supply by one party leads to failures by others who are dependent on that supply, and so on. An inability to rely on the statement in proceedings could result in customers being forced c» wait for an actual failure of supply post- January 1, 2000, and only then attempting to source alter- native supplies. In situations where supplies are limited, market forces could impose significant losses on businesses ‘The only remedy left may be to pursue a potentially insolvent supplier for losses suffered. Its our understanding that this is the type of scenario that the Act is aimed at preventing, especially as the Act does not seek to interfere with existing contractual rights. In our view, it may have been preferable to have a provision to the effect that a Y2K IDS can be used in evidence in circumstances where the statement evidences an antici pated breach of contract to justify cancellation of the contract. ‘The customer would then have had an opportunity to imple- ment effective contingency plans. Practical steps {fan organisation's supply to consumers is dependent in any way on date(s) (such as celiance on machinery with date- sensitive embedded chips or on utility suppliers with date dependencies) it will need to ensure, where appropriate, that it complies with the formalities required under the Act in statements about continuity of supply in order to maximise the protection potentially available to them. However, ifany Ss are being made t consumers, the Act offers no pro tection. ‘An organisation, as a user of products dependent on date(s) must take into account the fact thet statements made by vendors or others embraced by the Act may: attract no civil liability; and ‘© not he used in evidence against the maker of the statement, ‘The organisation should consider in each instance whether it {s reasonable to rely upon such a statement from a supplier, of whether farther enquiries, such as independent testing of machinery, may be necessary. . Conclusion Commentators have said the Act is "too litle too late”. There Js a certain tna to this. However, one should not forget that the Act does cffer opporvunities (albeit limited) to organisa~ tions to exchange information and help each other address ‘Y2K problems. However, the Act does net free companies from the dificult decision of whether to make cerain Y2K statements. The Act, by modestly reducing some of the risks, will tend to shift the balance towards disclosure in some situa- tions. But case-by-case review of Y2K statements continues tobe essential. The Act isa step in the right direction. And no ‘one can say it came to0 soon. [Om] CTL ISSUE | SWEET & MAXWELL LITED AND CONTRIBUTERS)N ASSIA : COPYRIGHT PROTECTION OF SOFTWARE IN ISRAEL AND IN CYBERSPACE : [2000] G.TLR. 21 CopyRIGHT PROTECTION OF SOFTWARE IN ISRAEL AND IN CyBERSPACE NAOMI ASSIA, ADV Z ‘Computer software piracy is quite a common phenomenon in Jstael. Israell computer software corporations suffer as a consequence: it has become almost the norm, especially among large companies, to acquire a small number of legal copies of software, copy them illegally and then use a large number of illegal copies. Software corporations in Israel are vigorously fighting against this phenomenon. This article is @ brief overview of the methods of copyright protection availa ble to copyright owners of computer software in Isteel. Copyright Protection ‘The most extensive and accegted form of protection for computer software in Israel is copyright. The pertinent legis- lation is @ leftover from the British Mandate, the Copyright Act 1911? (“the Act”) and the Copytigit Ordinance 1924 ("the Ordinance”). Copyright exists in Israel in every original Sheracy, dramatic, musical and artistic work, as long as: (a) inthe case of a published work, it was first published in Israel; and (b) in the case of an unpublished work, the author was an Israeii national or resident at the time he or she created the work According to section 5(4) of the Ordinance copyright exists in ‘works from the time of their creation throughout the author's life and fora period of 70 years after his death. Under Section 5(1) of the Act, the author of a work is the first owner of the copyright in the work. In July 1988, the Israeli Knesset amended the Ordinance to inchide protection for computer software. Amendment No 5 states: “For the purpose of copyright, computer software shail be weated in the same way as a literary work within the meaning theteof contained in the Copyright Act, 1911.” ‘Thus, in Israel, a copyright owner of computer software may avail himself of the protections contained in inter national treaties to which Israel [sa signatory and of the extensive case law on copyright which exists in Israel. Infringement of Copyright The Act can be violated by a direct or indirect act of infringement. Under section 2(1), direct infringement occurs “when any person who, without the consent of the owner of the copyright, does anything the sole right to do so is by this Act conferred on the owner of the copytight.” Under section 2(2), indirect infringement occurs when “a person: sells or lets for hire or by way of trade exposes or offers for 1 The British Act, published in 3 ssraet Laws 2633, 2 Published in 1 feael Laws 368. 5 5.1 ofthe Act and 5.4 of the Ordinance, NAOMI ASSIA LAW OFFICES. RAMAT HA SHARON. ISRAEL sale or hite, or... distributes forthe purposes of trade, or. . imports for sale or hire . . . any work which to his knowledge infringes copyright ot would infiinge copyright ifit had been made in Israel.” Moreover, inftinging is defined by the Act as +++ any copy including any colorable imitation made ot imported in contravention of the Act.” Remedies for Infringement of Copyright Injunction Upon a proper showing of the level of potential damage by a copyright owner, Ist courts will not hesitate to issue a temporary injunciion against an alleged copyright inftinger because of the extensive harm that the copyright owner can suffer awaiting tial or seclement of the matter. The issuance ofan injunction is discretionary with the court; thus, all tae facts and circumstances of the case will be considered.* Receivership ‘The court may appoint an ex parte receiver who has the authority to enter the premises of a defendant(s) who is infringing another's copyright (for example the possessors and/or distributors of pirated software} and confiscate, in the defendant's presence, the software believed to infringe the plaintiff's copyright. Further, the teceiver is authorised to enter such a defen- dant'’s premises at all times until the end of the particular case (this may be several yeats) in order to ensure that the directives of the injunction are being observed. This remedy is also given against end-users. In a tecent case sponsored by the Business Software Alliance (BSA), a lawsuit was filed by Aulodesk Inc, against a large engineering company and the plaintiff's attomey was appointed an ex parte receiver. In the raid that followed the appointment, 18 prima facie infringing copies of AutoCad software were found. The appointment of a receiver is clearly a strong deterrent against potential infringement. 4 Ashrac x, Resh Gesher et al, Cuil Fle No. 2453/87 (unreported, ‘Tel Aviv Distr Cour (he paint obtained an injunetion zeszain- ing former employers from marketing unauthorized copies of ts software to itscustomers); Ashton Tate Ltd v. Anani Ltd, Civil Fle No, 1150/87 (unreported, Tel Aviv District Cou). 5 Ses Magis youre Enterprises Let Compushate Ld, i le 617/94, Motion No. 4375/94 (unreported, Tel Aviv District Court); Machshevet Mi, Led & ia Lid W, Bilat Mickon Computers Zed, Gil File No. 74/94, Motion No, 282/94 (unrepored, Beet Sheva Diswict Coun}; Macishevet MLL. Led v. Giladi, Civit Fle No. 814/95, Moton No. 6945/93 (unreported, Tel ‘Aviv District coun} 6 Autodesk Inc. v. Nepro, Civil Fle No, 251/94, Motion No. 1007/94 (unreported, Beer Sheva District Court} [BG] CTL ELE | © SWEET 8 MAXQWELL LIMITED [AND CONTRIBUTORS)22 ASSIA : COPYRIGHT PROTECTION OF SOFTWARE IN ISRAEL AND IN CYBERSPACE : [2000] C.TLR, Anton Piller/Seizure Order An Anton Piller order is an ex parte order authorising an applicant's attorney, or the court's designee, to enter the defendant's property and seize the infiinging products as well as the means used to produce them (ie. the computers used to unlawfully reproduce the software). This remedy can be especially effective because it can prevent the destruction or hiding of legal software prior to judicial hearings. Despite the harshness of the remedy, Israeli courts have demonstrated a willingness to use it if sufficient evidence exists.” Private Criminal Complaint A remedy available in Israel that is not available in some other countries (ce. the United States) for violations of copyright is the ability of a copyright owner to fle a private criminal complaint in the magistrates court against the alleged infringer. In a private criminal case, the cou:t can grant remedies such as imposing fines or even a jail term. In Haviv v. Microsoft? the court found, in a private criminal complaint, that an ex parte search and seizure warrant may be issued in order to prevent the deletion of pirated computer files; although the police must perform the search and seizure, they must use the assistance of an expert of the plaintiff to execute said search and seizure. The court can impose a sentence of up to three years’ imprisonment and a fne of up to 763,000 NIS* (currently the approximate equivalent of U.S.$234,770). Damages The monetary reinedies a copyright owner may recover ifhe establishes infringement include recovery of damages and lost profits and costs, including attorney's fees. A permanent {injunction may also be obtained. This is in addition to the sonliscation of the infiinging copies and the receipt of restraining orders for infringing activities. ‘Under sections 6-8 of the Act, an action may be filed to recover possession of copies which inftinge copyrighted works andenjoinacts of infringement, Even ifa plaintiff cannotshow damages with sufficient particularity, section 3A of the Ordi- nance provides statutory damage award as flows: “Where the damage caused by the infingement of a copyright +has not been proved, the court may, on the application of the plaintiff, award, in zespect of every inftingement, compensation fa an amount of ot loss than 10,000 NIE.” [ourrently the approximate equivalent of US.$3,075.] In Sqggi etal. v. The Estate of Abraham Ninio™ the Supreme Court held that the ilegal reproduction of one copyright in 7 See Machshever Led ¥. Avi-Or, ivi File No, 10/92 (unsegorted, ‘Rl Aviv Diswict Cour); Topsoft ». vepsh. Civil Fle No. 955/91 (unreported, Tel Aviv District Coun); Microsoft» Qynamic, Civil le No, 2539/90 (unreported, Tel Aviv District Coun) 8 See Microsoft v. Pasgal Computers Led, Criminal File No. ‘9055/88 (unreported, Tel Aviv Magisicates Court) (a three-month suspended imprisonment and a fine was imposed on the aocsed: in te parallel civil sult, an interim injunction was awarded); Microsgft % Kolbe Corpucer Led, Criminal File No, 1851/91 (uareported, Jerusalem Magiseates Cour) (a search and stizue warrant was ‘awarded under the criminal procedure; the cour ondeved the Israel Police Department to execute the warcan:). 9 Hany ¥. icrasoft Corp, Coal Fle No. 5020/92 (Tel Aviv ‘Magis Coury, (1992) 4 P2301 10 Sefer Hachubkim, No. 1261 of july 27, 1988. 11 Saggt et al. v. The Escate of Abraham Ninio, Coil Appeal No, 1592/88, PD. 46 (2) 254. large quantities will be considered asa single infringement and that it will be possible to apply the statutorial compensation several times only where the defendant has infiinged several copyrights, However, the number of infringing acis will be taken into account when deciding the compensation rate. Several cf the lower courts have applied Saggt, above, speciically the ruling that copying one computer software program constitutes one iniringement of copyright, regard- Jess of the number of illegal copies made, However, the umber of copies made and the motive of the iniringer will be taken into account in determining the amount of com- pensation. !? Organisational Actions against Software Piracy One of the most active corporations in the fight against computer software piracy in Israel is Autedesk Inc. In a series of cv suits against illegal users of software,’® Autodesk has settled out of court, receiving damages based on section 3(a} of the Ordinance, renam of legal expenses and acquisitions of Jegal software copies (by the defendants) at full price—in total, sums of between 100,000 NIS (cactently the approx- imate equivalent of U.S.$28,570) and 150,000 NIS (cur rently the approximate equivalent of U.S.$42,857). ‘A new breakthrough in anti-piracy activity occurred in ‘August this year, when Autodesic joined BSA, the Israeli Organisation of Software Protection (JOSP) and Microsoft in fling svit, through Naomi Assia's law firma, against one of the largest israeli-operated on-line bulletin board systems, One ‘Man Crew. The operators of One Man Crew had been making ilegal copies ofa large variety of software programs (includ- ing popular programs, such as AutoCad, Office, computer games and others) available to its subscribers to download co ‘their personal computers. The prosecutors have cbtained a preliminary injunction from the distict court in Halfa to stop the operation of the BBS and to enter the operators’ premises in order to gather evidence of the illegal activity of the BBS. The parties are currently negotiating for a settlement, BSA, which initiated the action, comprises some of the largest software houses throughout the worid, including Microsoft, autodesk, Novell, Adobe and Burland. It aims to fight software piracy throughout the world by legal and educational means. According to two of Microsoft's American lawyers, and vice presidents of BSA, Jeffrey Steinharde and Brian McEachron, who visited Israel shortly after che action against the One Man Crew BBS, their statistics (from 1996) show that about 70 per cent of the software used in Israel is ilegal, and that the cost to software houses amounts to about U.S.$57m a year. The 1OSF, which joined BSA in this action, comprises the largest software houses in Israel, such as Microsoft (Israel), Autodesk (Israel), Magic Software Enterprises, Makh-Shevet, and Aladin. 10SP plays an active role in the efforts now being tmade in Israe: to amend the Act, so that there can be ne doubt that the illegal use of software copies is criminal felony and is subject to private criminal sults, 12 Sadar Computers Lid. v. Alkto et al., Cvil Fle No. 831/90 (unrepored, Nazareth Diswict Coun; Shor Industries Computer Program Led v. The Gate of Jerusalem Hotel, Civil Fle No. 472/50 (unreported, Jersalera istic: Cour). 15 See Auradest fhe v. Nepro, CWil Fle No, 251/94 (unreported, Beer Sheva Distrce Coun): Autodesk me v, Arkadi, Cv Fle No 1618/95 (untepotted, Halla District Cour): Autodesk tne. v. Shosh- ani, Civil File No. 613/96 (unteponed, Tel Aviv District Cour; Autodesk ine v. Tear, Ciel File No. 614/86 {unteported, Tel Aviv District Cour) [Bon CLR. SVE | © SWEET & MAKWEL LNTTES [AND CONTRAUTORS