International E-Commerce Laws

International e-commerce laws come into play for every business that has a website since the internet has no boundaries. In other words, even if the business plans to attract customers in a specific state or country, it is still plausible they can be reached beyond those territories. Therefore, every online business should be familiar with the relevant state, federal, and international laws.

The United States federal government has passed several laws to address e-commerce transactions within its territories. These laws are intended to promote the electronic commercial transactions and prohibit violations such as fraud, identity theft, unlawful computer access, and intellectual property theft. The states have also passed parallel laws in order to address the same issues in their jurisdictions.

The European Commission has issued directives that will have a correlation to U.S. business enterprises. These directives include the EU Data Protection Directive No. 95/46/EC (“Data Protection Directive”) that prohibits the transmission of personal information of its citizens to foreign countries without adequate protection. It requires personal information to be collected for legitimate purposes and proper notice to its citizens regarding the data collection’s purposes. It also includes the “Right To Be Forgotten” policy. The European Commission issued amendments and included guidelines for using cookies or other tracking mechanisms. Now, recently, it substituted the former Data Protection Directive with the General Data Protection Regulation (“GDPR”) which extends to data controllers and processers outside the European Union that process activities for the sale of goods and services or monitor the behavior of its citizens. It requires the designation of a Data Protection Officer who has knowledge of the data protection laws and practices. In 2016, the European Commission along with the United States stipulated to a new program referred to as the “EU-U.S. Privacy Shield” to address the transfer of personal information from the European Union to the United States. This program imposes stricter guidelines on U.S.-based companies for the handling of personal information of European citizens. It also imposes certain conditions and tasks on U.S. government agencies.

A company that is located in the United States and conducts its business online may be subject to a foreign nation’s laws. The Hague Conference on Private International Law has adopted a Convention on Exclusive Choice of Court Agreements – i.e., the “Convention” – which regulates jurisdiction and judgment enforcements. The Convention addresses the enforcement of agreements between the interested parties within a predesignated jurisdiction. It also applies to non-consumer browse-wrap and click-wrap agreements so long as there are proper disclosures.

In some cases, it is difficult to seek protection of U.S. laws when the online business is engaging in transactions with foreign nationals. There have been cases where the foreign courts were not willing to grant protection to U.S.-based online businesses when their conduct had a substantial effect within their territories. For example, a U.S.-based company was held liable under French laws for selling Nazi-related material or memorabilia to French customers. The situation may be different if the interested parties consent to a specific jurisdiction to resolve their disputes. Moreover, the courts have declined to apply U.S. laws when the electronic communications had traveled through their domestic networks on their way to a foreign nation.

The foreign courts may exercise jurisdiction when the online business transactions have a substantial effect in that foreign nation. The foreign courts can decide to exercise jurisdiction on U.S.-based entities if the effects are felt and damages occur within their forums. This may even apply when the allegedly defamatory comments were posted on the U.S.-based entity’s website regarding a foreign person. Also, a foreign judgment is usually enforceable in a U.S. federal court based on the Doctrine of Comity. However, there are the following mandatory exceptions: First, if the judgment was issued by a judicial system that did not use an impartial tribunal or provide compatible procedures with the due process of law. Second, the foreign court did not have jurisdiction over the parties. Third, the foreign court’s judgment was in reference to defamation and its enforcement was forbidden by federal free speech laws. For example, in Google, LLC v. Equustek Solutions, Inc., a district court overruled the Canadian Supreme Court’s judgment against Google for failing to de-index websites on a global scale because its ruling undermined the Communications Decency Act’s policy goals and threatened free speech on the global internet.

International electronic contracts – e.g., smart contracts – have been addressed by the United Nations Commission on International Trade Law (“UNCITRAL”) that has adopted a Convention on the Use of Electronic Communications in International Contracting. This Convention is intended to validate electronic contracts that are consummated by using internet technologies. Now, smart contracts are being used to automatically execute the contractual terms between the parties. However, they are still susceptible to unauthorized access or other kinds of cybersecurity risks.

International intellectual property rights have been addressed by various national and international laws to promote harmony. However, there is still no uniform legislation when it comes to protecting them. As of now, the World Intellectual Property Organization (“WIPO”) and the World Trade Organization (“WTO”) are involved in the process of resolving intellectual property right disputes. For example, disputes can arise in reference to counterfeiting of products. There are certain remedies and mitigating factors that can be used for protection. In fact, the Madrid System for International Registration of Marks provides the opportunity to register trademarks in foreign nations so the intellectual property right holders can prosecute their claims in the proper forum. They can also register their trademarks with the United States Customs and Border Patrol (“CBP”) as an additional step.

It's important to know your legal rights and responsibilities when it comes to international e-commerce laws. Please contact our law firm to speak with a knowledgeable international e-commerce attorney at your convenience.