Cyber laws, India’s needs and the Company Secretary’s role

Subramaniam Vutha

Advocate

svutha@svutha.com

Key concepts

• LAN

• WAN

• Internet

• WWW

• Cyberspace

• Law of cyberspace

Comparison with

• The automobile highway

• Aviation

• Web 2.0 – Speed– Reach– Connections– Options and implications

How does the law come in?

• Technology does what technology can

• Technology is not concerned about rights, limits, obligations and remedies [from the knife to space exploration]

• But the law is about all these

Real life; virtual life

All these have shifted to Cyberspace:

• Work

• Play

• Interact

And each of these has become a business

You are already in cyberspace

• Banking

• Entertainment

• Email

• Filings

• Electronic signatures

• Knowledge sharing or accessing.

• Google gets you going

A slow quiet revolution….

• Inversely proportional to age

• Makes history and heritage a burden sometimes

• But can the Internet keep the law out – remember the Declaration of Independence of Cyberspace

IMPLICATIONS FOR BUSINESS

• Demand for corporate transparency rises

• Ability to provide disclosure zooms

• Going concern concept dying?

• New threats to old businesses? Why your newspaper looks more like a TV and a website?

• Typists at the top

• B2B, B2C, C2B, C2C, P2P ……….

More implications

• Share markets recognize knowledge; MS and Intel v/s Ford, GM, Boeing, Kodak, etc etc.

• The Death of Distance?

• Companies are already virtual entities. Now businesses are becoming virtual?

HYPE vs REALITY• Global village? Borderless world? More

countries [ 1950 – 58, 1999 -185 at UN]

• Finance flows, goods move, people fly, paperwork grows. So do viruses.

• Data is shared/strewn, information is hoarded, knowledge is en-cashed and IPR is used as a strategic weapon.

• The Law steps in.

CYBER LAWS

• A new comprehensive cyber law?

• Or laws adapted for cyber space?

• I T laws, v/s Cyber laws, v/s e-commerce laws.

LAWS LAG TECHNOLOGY

• Growing hiatus -

• Use of traditional theories. E.g. Doctrine of stock exhaustion

• The minimalist approach [India’s I T Act]

India’s I T Act…..

• Functional equivalence, e-governance, offences, digital signatures and remedy framework

• Other laws that apply?

• Contracts, policies, disclaimers and information security fill the gaps. [ Crucial role for CS]

The Internet & Corporate Governance

• Greater disclosure

• Greater frequency

• Greater reach & speed

• NAVs on your mobile

• Edifar, MCA 21 …………

• Authenticity? Dispersed disclosure model?

• The Birbal story

Contracts in Cyberspace

• Web offers

• Emails like faxes; www like telephone

• The perils of mail boxes

• Email contracts versus web contracts

More about cyberspace contracts

• The challenges of

a. Authenticity

b.Integrity

c. Non repudiation

And the role of electronic signatures, CA, and the Public Key infrastructure.

A comparison

Real world contracts

• Offer

• Acceptance

• Consideration

• Parties

• Capacity

• Lawful object

• Ad idem

Cyber space contracts

• Email v/s web

• Contracts of adhesion

• Payment gateways

• Who is that?

• Minors, tricksters?

• Law variations

• Hidden/obscure terms?

Cyber space and torts

• Duty of care to a neighbor

• Duty to act, duty not to harm [Weller & Co vs Food and Mouth Disease Research Inst]

• Primary v/s secondary damage?

• Warnings, disclaimers, limitation of liability

• Lower human interaction; chain of risk?

• Finding v/s requesting [Caparo V Dickman]

Cyberspace and IPR

• Trademarks, service marks and domain names

• And copyright challenges [more later]

• Patents for business models. The story of Jay Walker and priceline.com. Quid pro quo for patents and the Internet.

• Trade secrets and Echelon

Cyber space and new business models

• Amazon.com and the corner book store

• Reverse auctions

• Monopsony on the Net

• Directed driving or surfing

• Telemedicine

• E-chaupal

• E-ducation

Cyber space and the consumer

• Loss of privacy

• Distance selling directives, OFT, SEC, FTC

• Allocation of risk

• The centrality of trust

Cyberspace and taxes

• Money laundering

• Digital cash

• A PAN for everyone

• Indirect taxes – bits and bytes!

• The Net tightens

Cyber space and copyright

• Is everything on any website free for all?

• Implied licenses, non derogation from grant.

• Forwarding e mail

• Open source [manufacturing for masses v/s manufacturing by the masses]

• UGC

Counter forces

• Open systems and monoculture risks

• Data v/s Information

• Greater connectivity v need for insularity

• Fewer intermediaries v more info-mediaries

• Curbs conventional crime and facilities white collar or economic crime

• Piracy for long term benefits?

Cyber crime

• Forgery• Counterfeiting• Identity theft• Tax evasion• Electronic vandalism• Electronic terrorism• Espionage• RTP/UTP

• Sales, Investment frauds

• Advertising frauds• Interception/ tampering• Spam and DOS• Spoofing, shilling,

bidding agents• Pumping and dumping

New opportunities

• Accreditations

• Cyber notaries? Sp. Certifying Authorities ?

• Standards, certifications, audits• Self-regulation, “soft” infrastructure”• High velocity remedial systems • Insurance • Education

The Perils of Paperless operations

• Digital obsolescence

• Dependence on power supply

• External threats like dust, heat

• Handling risks for digital media

• The nanosecond nature of digital destruction

Privacy (contd)

• Data protection obligations include– lawful procurement– lawful purpose– lawful use– adequacy test - not excessive– accuracy and updation– access to persons concerned– security

Role of the company secretary

• Debate and understand implications

• create web sites ( WIRC, ICSI)

• influence and help formulate a national e-commerce framework

• contribute to “soft” infrastructure eg., insurance and liability advisories, funding and IPO’s , IPR advisories, venture capital networks, “web-creation” for entrepreneurs with enabling agencies

Role of Company Secretary (contd)

• Permit and encourage foreign linkages

• introduce e-commerce laws, IPR laws in the curriculum

• review which other laws need changing to foster e-commerce eg., bankruptcy laws, company law (for new types of entities, consolidation of annual accounts, M& A)

The Technology Law Forum

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• Building bridges between Technology and Law

• Your virtual forum for ongoing interaction

• Write to subramaniam.vutha@gmail.com from a g mail id only.

THINK

• Data, information and knowledge. Knowing the difference can make a difference to your working life

• What would you call the current economy? And what are its implications for you?