An investigation into how the European Union affects the development and provision of e-learning services

8/20/2019 An investigation into how the European Union affects the development and provision of e-learning services

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. . . . . . . . . .

Jonathan Bishop

Scientific Economic and Legal Issues for

Virtual Communities and Electronic Learning

Masters Dissertation in European Union Law

An investigation into how the European

Union affects the development and provision

of e-learning services

University of GlamorganLlantwit Road, Pontypridd

Academic Year: 2006/2007


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To My Father


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Author’s Forward

As an individual that holds an MSc degree in e-learning and who is also on the Board

of Directors of a co-operative e-learning firm, understanding the legal issues affecting

the industry in which the company I have legal responsibilities towards is important.

Having developed e-learning systems since the 1990s, I brought to this project a lot

of knowledge of the intricacies of e-learning projects, and through undertaking the

certificate and diploma stage of the course I gained a good insight into the main

principles of European Union Law. This dissertation focuses on the main aspects of

EU law affecting the e-learning industry and of particular interest to me were

competition law and intellectual property law. I also drew on my understandings of

the European Union as a voter and member of a political party that gives me accessto MEPs and Members of the Council of Ministers to provide my opinion of how I

believe primary legislation of the EU should be changed to better represent the

interests of the e-learning industry and the three interests of the Community, the

Nations and the People. Proposals are put forward for changes in secondary

legislation also, which would have direct benefits for the e-learning industry. This

dissertation is my own work. All sources used, quoted, summarised and otherwise

referred to within are fully credited and cited in the bibliography.

Signature: _______________ Date: _________________

Acknowledgements

The author would like to acknowledge all the individuals who provided comment and

feedback on this dissertation. In particular the author would like to thank his mother

and carer for providing the essential personal support he needed to undertake this

project, his father to whom the dissertation is dedicated, who the author has looked

up to since a young age and who has provided a good example of business

leadership for the author to follow, his brother, who is also a company secretary, for

supporting the author’s bid to undertake the course, and his friends, who have

listened to him endlessly talk about proportionality, subsidiarity and representativity.

This dissertation is submitted in part completion of study for the award by the

University of Glamorgan of the degree of LL.M. in the academic year 2006/7.

Signature: _______________ Date: _________________


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Table of Contents

AUTHOR’S FORWARD......................................................................................................................1

ACKNOWLEDGEMENTS...................................................................................................................1

TABLE OF CONTENTS......................................................................................................................2

INTRODUCTION .................................................................................................................................4

THE E-LEARNING INDUSTRY ........................................................................................................5 The Undertakings that form the e-learning industry .......................................................6

HISTORY AND FUNCTIONING OF THE EUROPEAN UNION ......................................................8

THE INSTITUTIONS OF THE EUROPEAN UNION..............................................................................8 The European Commission..............................................................................................9 The Council of the European Union ................................................................................9

The European Parliament ................................................................................................9

The European Court of Justice ......................................................................................10

SOURCES OF EUROPEAN UNION L AW ........................................................................................10

PROVISION OF GOODS AND SERVICES ....................................................................................11

PUBLIC PROCUREMENT .............................................................................................................11 Public Procurement in Practice......................................................................................12

DISTANCE SELLING....................................................................................................................13

EUROPEAN COMPETITION LAW..................................................................................................16

ARTICLE 81 ...............................................................................................................................16 Exemptions under Article 81(3)......................................................................................17 Horizontal Agreements ...................................................................................................17 Price-fixing agreements .................................................................................................................................17

Production Quotas..........................................................................................................................................18

Market Sharing ...............................................................................................................................................18

Vertical Agreements .......................................................................................................18

Exclusive distribution agreements ................................................................................................................18

Exclusive purchasing agreements and licence agreements .........................................................................19

Selective distribution agreements .................................................................................................................19

The De Minimis doctrine.................................................................................................20

ARTICLE 82 ...............................................................................................................................20 Dominant Position...........................................................................................................20

Abuse of a dominant position .........................................................................................21 Predatory Pricing............................................................................................................................................21

Discriminatory Pricing and Fidelity Rebates ...............................................................................................21

Refusal to deal or supply ...............................................................................................................................22

Unfair trading conditions...............................................................................................................................23

Market partitioning ........................................................................................................................................23

Mergers ...........................................................................................................................................................23

MERGERS..................................................................................................................................24

The Merger Regulation...................................................................................................24 Ancillary Agreements......................................................................................................25

EUROPEAN INTELLECTUAL PROPERTY LAW..........................................................................27

COPYRIGHT ...............................................................................................................................27 An overview of the EU Directives relating to copyright ................................................28

DESIGNS ...................................................................................................................................31 P ATENTS ...................................................................................................................................32 TRADEMARKS ............................................................................................................................32 ENFORCEMENT OF INTELLECTUAL PROPERTY ...........................................................................32

EUROPEAN EMPLOYMENT LAW .................................................................................................34

EQUALITY OF P AY AND TREATMENT...........................................................................................34 WORKING TIME LEGISLATION ....................................................................................................34

EUROPEAN SAFETY, HEALTH AND ENVIRONMENTAL LAW ................................................37

THE BUILT ENVIRONMENT .........................................................................................................37 PRODUCT S AFETY .....................................................................................................................38


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DEVELOPMENTS AND PROPOSITIONS FOR CHANGES IN EU LAW .........................................................40

FUNCTIONING OF THE EUROPEAN UNION...................................................................................................................40 The Principles of European Union Law .........................................................................40

The European Commission............................................................................................41 The Council of the European Union and The European Parliament...........................42 The Social Partners ........................................................................................................43

EUROPEAN COMPETITION AND INTELLECTUAL PROPERTY L AW .................................................45

EUROPEAN EMPLOYMENT L AW ..................................................................................................46 EUROPEAN S AFETY, HEALTH AND ENVIRONMENTAL L AW ..........................................................47

DISCUSSION.....................................................................................................................................49

REFERENCES ..................................................................................................................................57


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..........Legal Issues for Virtual Communities and Electronic Learning

An investigation into how the European Union affects the development and provision of e-learning services Introduction

The worldwide e-learning industry is estimated to be worth over 38 billion euros

according to conservative estimates, although in the European Union only about 20%

of e-learning products are produced within the common market. In 2000 the

European educational multimedia industry was undercapitalised as links between

education and training systems and the industry were not strong enough to generate

viable services that cater for education and training requirements (EC, 2000). It has

been argued by the European Commission that another reason for this

undercapitalisation is because much of the development of e-learning systems

comes from a high number of small firms within the industry. Critics would argue that

this is only a problem because of how small businesses have been burdened with

increased legislation originating from the European Union, which now legislates in an

increasing number of areas affecting small to medium-sized undertakings. Indeed,

some now estimate that European Union Law accounts for about half of the

legislation in Member States, with countries wishing to join the European Union

facing around 80,000 pages of EU law to incorporate into their national legislation

(Mulvey, 2003). Despite the legislative burden placed on small e-learning firms, the

attitude of the European Commission towards e-learning is very positive. According

to one estimate, in 2001 around 50 million euros from the budget for education and

training was spent on projects which could be considered as promoting e-learning,

but the largest amounts have been channelled to the Structural Funds and the

framework research programme (Mauro, 2003). Since 2000 the European Union

institutions have collectively promoted an agenda for e-learning, with measures to

increase its uptake by educational service providers and promote research and

development into its design and use. The eEurope 2002 Action Plan made e-learning

a priority, with the aim of connecting all schools to the Internet, which had all but

been achieved, leading the institutions to shift to their attention to wider educational

use of e-learning. The eEurope 2005 Action Plan set out to launch the e-Learning

Programme to support priority areas, which included analysing the European market


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for e-learning, including the private sector to identify obstacles and propose remedies;

establishing virtual campuses for all students by ensuring all universities offer online

access for students and researchers to maximise the quality and efficiency of

learning processes and activities; ensure that all schools and universities as well as

other institutions that play a key role in e-learning (e.g. museums, libraries, archives)have broadband Internet access for educational and research purposes. Crucially,

the European Union recognised the importance of e-learning for training purposes

and allocated Structural Funds and Commission support for Member States to launch

actions to provide adults with the skills they need for employment.

The E-Learning Industry

Developments in Internet and multimedia technologies are the basic enabler of e-learning, with content, technologies and services being the three key segments of the

e-learning industry (Nagy, 2005). Before the microcomputer revolutionised e-learning,

the television was seen as the technology that would transform learning, and

television products for the classroom formed the basis of the early e-learning

industry. In this industry a time was envisaged where there would be classrooms of

learners without teachers, who would be happily absorbing all manner of knowledge

through a television set (Rosenberg, 2000). Coupled with the view that this form of e-learning could lead to greater social justice, the British Labour Party in 1963

proposed a ‘University of the Air’ through which lower income groups could access

higher education through television and radio and after winning the election in 1964

Harold Wilson’s Government established a committee that led to a manifesto

commitment at the 1966 election to create the Open University. Whilst television-

based content, technologies and services have remained part of the e-learning

industry, the industry evolved dramatically with the advent of the personal computer,

which created a greater interest in interactive content, leading to the advent of

computer-based training. As the personal computer became a greater part of the

workplace and home, the evolving e-learning industry began to see an embedded

base of hardware to run their programs, but the differences in hardware, software,

programming languages, and other technical barriers made universal availability

more a dream than a reality as software had to be developed in different formats,

which was an expensive proposition, particularly as just when a program hit the

marketplace, rapid changes in technology platforms made it obsolete and the

conversion of 5 1/4 to 3 1/2 floppy disks, the incompatibility of Apple, UNIX, and IBM-


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type computers, coupled with the complete lack of authoring and development

standards, played havoc with the emerging computer-based training (CBT) sector of

the e-learning industry (Rosenberg, 2000). Computer-based training encompassed

any training delivered via a computer and with the advent of the CD-ROM corporate

undertakings began to demand that the e-learning industry deliver by this methodbecause of its ability to store large, media-rich files, and the term CBT became

synonymous with training delivered by CD-ROM (Stone & Koskinen, 2002).

Proponents of e-learning via CD-ROM talked-up its potential at conferences and

seminars (e.g. Megarry, 1989), emphasising the role of hypertext, but did not

envisage the next stage of the e-learning industry, which was to use hypertext-based

systems over the Internet to deliver learning. Even as people across Europe were

connecting to the Internet in increasing numbers the CD-ROM was still seen as themode for delivering learning. Williams (1998) argued that people like to own things,

and would prefer to have a CD-ROM library than download their information. Whilst

delivery of educational material by disc, either CD-ROM or its successor DVD-ROM

is still a core business for the e-learning industry, the biggest growth since the

increase in use of high-speed Internet connections, such as broadband, has been

Web-based learning. While the Web has revolutionised the e-learning industry, in

that content is now delivered by this means more so than on CD-ROM, there is

further change ahead with the drive for better provision of e-learning services. The

services sector of the e-learning industry is set to grow significantly as the demand

for blended learning increases. Blended learning, as the name suggests, involves

blending e-learning with traditional methods of learning and development and it is

argued that it is the most logical and natural evolution of the learning agenda

(Thorne, 2003).

The Undertakings that form the e-learning industry

In terms of the EC Treaty, what constitutes an undertaking has not been defined, but

it has been subject to wide interpretation by the European Court of Justice (Hanlon,

2003). The e-learning industry can be seen to consist of undertakings that provide

content, technology and services as well as undertakings that support the industry

(Henry, 2001). These undertakings include small to medium-sized e-learning firms

that produce the content and software, large software companies that provide the

platform on which to run the software, manufacturing firms and their supply-chain thatprovide the hardware and media, telecommunications companies that provide the


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network infrastructure, educational establishments and training firms that provide the

services as well as content, self-employed consultants who contribute to the

consulting sector and technical and administrative enterprises that contribute to the

support sector.

Market segmentation of the Web-based services sector of the e-learning industryreveals that e-learning products and services serve three primary markets, which are

corporate training, secondary education and post-compulsory education (Whalen &

Wright, 2000), although it is becoming more common for e-learning services to

provided to other areas such as in out-of-school clubs. Increasingly public authorities,

such as central, regional and local government are becoming clients of the e-learning

industry and there are an ever-increasing number of public procurement proposals

relating to e-learning published in the Official Journal of the European Union.


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History and Functioning of the European Union

Visions of a unified Europe with a centralised government have existed since the

Roman era, but while such visions of diluting national identities have failed, the vision

of a common market has prevailed. Such ideas of being able to trade freely with

one’s neighbours are not unique to the 20th and 21st centuries. In the 14th century

the people of the Welsh town of Llantrisant petitioned the Lord of Glamorgan, Hugh

Despencer for the right to trade freely within their own town, a freedom that was

granted them in 1346 with the Llantrisant Town Charter. The Charter created a new

borough, which existed until 1889, and gave the Freemen of Llantrisant a measure of

self-government, their own courts of law and control on markets and fairs as well asgrazing rights over the common. The dream of the Freemen of Llantrisant to trade

freely with their neighbours is probably a microcosm of the dream to create the

European Common Market. Rycroft (2002) argues that the European Common

Market is the most important example of a common market in modern times; defining

it as a group of Western European nations that have agreed to strive for economic

integration and according to Burki (2000) the European Common Market is slowly

moving towards a more integrated European Union, with its own currency, the euro.The European Common Market grew out of the European Coal and Steel Community

(ECSC), which was founded in 1951 by its six founding members, namely Belgium,

Netherlands, Luxembourg, West Germany, France and Italy, with the purpose to pool

the coal and steel resources of its members. While the ECSC was successful,

attempts to create a European Defence Community (EDC) and European Political

Community (EPC) failed. Following the failure to create military and political union,

the six founders of the ECSC sought a perhaps more realistic and mutually beneficial

goal of economic integration and in 1957 established the European Economic

Community (EEC), referred to as the European Common Market in the United

Kingdom, with the signing of the Treaty of Rome. The founding treaty was based on

the “four freedoms” of free movement of goods, services, capital and people.

The Institutions of the European Union

The legislative arm of the European Union is made up of three institutions, which

each represent an interest. The European Commission represents the community

interest, the Council of the European Union represents the national interests of


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Member States, and the European Parliament represents the interests of the people of

the European Union. In addition to these there is the European Court of Justice

(ECJ), which is the body that interprets the EC Treaty and the legislation produced by

the three legislative institutions.

The European Commission

The European Commission consists of 25 members representing each Member

State, one of whom is the President, appointed by common accord of the

governments of Member States as set out in Article 213 (ex 157) of the EC Treaty.

No Qualifications are prescribed for Commissioners other than that they must have

general competence, their independence must be beyond doubt and they must be

nationals of a Member State (Weatherill & Beaumont, 1999). One of the core

responsibilities of the European Commission is to propose legislation, particularly as

even where the EC Treaty confers power on the Council of the European Union to

make decisions, as this cannot be done without a legislative proposal from the

European Commission (Kapteyn & VerLoren van Themaat, 1998).

The Council of the European Union

The Council of the European Union, often referred to as the Council of Ministers, is

the core institution for developing legislation based on a proposal from the

Commission. In accordance with Article 203 (ex 146) is consists of a representative

of each Member State at ministerial level, authorised to commit the Government of

that Member State with Article 202 (ex 145) stating that its main function is to take

decisions. According to Foster & Tillotson (2003) the Presidency of the Council

presently rotates among the Members States at six monthly intervals. This

mechanism ensures that the national interest of the Member States is accounted for,

with the holder of the Presidency being keen to achieve the maximum progress on

areas in their national interests during their term of office (ibid.).

The European Parliament

A parliament has been defined as a public body consisting of elected members

representing the interests of the people of a country (UN, 1992). To this extent the

European Parliament can be considered to be a parliament, but it lacks several

things that characterise national parliaments of the Member States. Unlike national

parliaments, the European Parliament does not have the power to initiate legislation,as it is the European Commission that initiates legislative proposals in the European


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Union. Also unlike national parliaments, the majority party of the European Parliament

does not form the government, as there is no executive. The functions that resemble

what a government would do, such as proposing legislation, are in most cases

carried out by the European Commission.

The European Court of Justice

The European Court of Justice is made up of 25 Judges and 8 Advocates General,

which may be increased by the Council of the European Union acting unanimously.

The Judges and Advocates General are appointed by common accord of the

governments of the Member State and hold office for a renewable term of six years

according to the EC Treaty and are chosen from legal experts whose independence

is beyond doubt and who possess the necessary qualifications that would be

required for appointment to the highest judicial offices in their Member State of origin

(Anon., 2006).

Sources of European Union Law

There are three sources of European Union Law; primary legislation, secondary

legislation and rulings of the European Court of Justice. According to Pasa &

Bennacchio (2005) secondary legislation is based on the EC Treaty and implies a

variety of procedures defined thereof; in the framework of the EC Treaty establishing

the European Union, secondary legislation make take the form of Regulations,

Directives, Decisions, Recommendations, or Opinions. Primary legislation includes

the EC Treaty and is agreed by direct negotiation between Member State

governments, and laid down in the form of treaties, which are then subject to

ratification by the national parliaments, with the same procedure applying for

subsequent amendments to the treaty (ibid.).


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Provision of Goods and Services

The free movement of goods and services is a founding principle of the European

Union. It is unequivocally clear that the Members States are not allowed to adopt

measures restricting trade in goods or services, with the main purpose of the EC

Treaty provisions on the free movement of goods and services being to abolish

restrictions created by Member States, and the great majority of cases and

Community legislation have been aimed at dismantling barriers created by public

authorities (Snell, 2002). Through Article 49, the EC Treaty contains a prohibition on

discrimination regarding the provision of services by a person in one Member Statewho is established in another (Woods, 2004). In the e-learning industry, this can be

seen as giving an undertaking that provides e-learning services, the right to provide

their services in another Member State, which is essential to the growth of the

industry throughout the Common Market.

Public Procurement

In some industries, such as the construction industry, public procurement has beenthe area of EU law that has had the most impact on their market, significantly

changing practices and procedures of the industry (Dalby, 1998). As the e-learning

industry matures, so this significant area of EU law is more likely to affect the

undertakings providing the content, technology and services to bodies funded by the

public purse. Between 2003 and 2004 the number of public tendering proposals

affecting the e-learning industry almost doubled and in recent years there have been

nearly 10 public procurement proposals every month for the e-learning industry totender for across the European Union.

It has been argued that there is little that the EU law can do to improve public

procurement in the information technology (IT) sector as a whole, particularly

because the IT sector is already a global industry, dominated by international

companies that have established themselves across the European Union (Medhurst,

1997). However, there is a place for EU law on public procurement in developing the

e-learning industry, which consists of a high number of small and developing firms,

which can only grow if they have fair access to public procurement projects.


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Public procurement in regard to the two procurement areas affecting the e-learning

industry, namely computer and related services and education and vocational

services are subject to a single directive, which combines three directives and their

amending directives. The Consolidated Procurement Directive (2004/18/EC)

combines the Supplies Directive (93/36/EEC), the Works Directive (93/37/EEC) andthe Services Directive (92/50/EEC), which were amended by Directive 97/52/EEC,

and extends them to include new provisions on central purchasing authorities, new

electronic procurement provisions and dynamic purchasing systems, framework

agreements as well as introducing a new competitive dialogue procedure.

The Consolidated Procurement Directive refers to the public procurement proposals

affecting the e-learning industry as public supply contracts and public service

contracts depending on whether the contract has their object as the purchase, lease,rental or hire purchase of e-learning products, or has their object as the provision of

e-learning services. There is a third type of contract, which are public works contracts

that refer to products of the construction and civil engineering industries, which do not

apply to the e-learning industry. The Directive defines the public authorities as

contracting authorities, which refer to the State, regional or local authorities, bodies

governed by public law, associations formed by one or several of such authorities or

one or several of such bodies governed by public law, with such bodies being

established for the specific purpose of meeting needs in the general interest, not

having an industrial or commercial character, having legal personality, and being

financed, for the most part, by the State, regional or local authorities, or other bodies

governed by public law; or subject to management supervision by those bodies; or

having an administrative, managerial or supervisory board, more than half of whose

members are appointed by the State, regional or local authorities, or by other bodies

governed by public law. Such an all-encompassing definition of public bodies offers

many opportunities for the growing e-learning industry to tender to provide e-learning

products and services to bodies funded by the public purse. Already new bodies

covered by the Directive, such as the National Assembly for Wales have awarded the

e-learning industry public service contracts for the development of e-learning systems

(2005/S 161-161086).

Public Procurement in Practice

While there may be a principle of best value from competing e-learning firms, e-learning firms tendering for public procurement projects need to observe whether


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tenders contain a technology exchange clause. Such clauses are means of public

authorities dealing with their responsibilities under the Consolidated Procurement

Directive that require them to chose the most economically advantageous tender. In

most e-learning projects the lowest price is rarely the most appropriate way of

determining best value, so such a clause gives the public authority the ability tochange the specifications of hardware and software provided by the e-learning firm to

the variants that are technically improved on the initial proposal. Public authorities

may also place clauses subjecting the e-learning firm to use technical specifications

based on national standards of the Member State they are part of. It has been

argued that such clauses limit the ability of e-learning firms to compete for tenders in

all Member States as they create obstacles to public sector procurement integration,

but it could also be argued that as each Member State has different requirements,such clauses are necessary to ensuring that the end-user of the e-learning system

learns in a way that is culturally acceptable to them. Despite such differing needs of

Member States that has been an increasing emphasis on harmonising technical

standards across the European Union through a number of non-governmental

standardisation organisations and the European Commission has been keen to adopt

directives that eliminate discrimination based on national standards (Bovis, 1997).

Distance Sell ing

Nagy (2005) asks what the dominant business model for selling e-learning will be and

discusses what the role of e-learning might be within the European Union, including

that it could be seen as a facilitator for producing and delivering rich multimedia and

high interaction. E-learning packages meeting these criteria, including Bear &

Penguins Maths Adventure by Dorling Kidersley Ltd, have achieved phenomenal

sales due to effective distribution across the European Union. One way in which e-

learning packages such as this one have achieved this is through distance selling,

including via Amazon.co.uk, where this particular package received a sales rank of

60 in 2006. E-learning firms wishing to sell their products in the European Union can

enjoy the right of establishment and freedom to provide their goods, including having

the freedom to market them by distance selling. In 1997 after the European

Parliament and the Council of the European Union reached agreement, Directive

97/7/EC, hereafter referred to as the Distance Selling Directive, entered the Official

Journal of the European Union, having a wide impact on how undertakings, including

e-learning firms, sell their goods and services to consumers at a distance.


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The Distance Selling Directive creates in law the existence of distance contracts,

which are defined as contracts concerning goods or services concluded between a

supplier and a consumer under an organised distance sales or service-provision

scheme run by the supplier, who, for the purpose of the contract, makes exclusive

use of one or more means of distance communication up to and including themoment at which the contract is concluded. The Directive places certain obligations

on suppliers, such as e-learning firms, including that they must provide the consumer

with specific information prior to the conclusion of the contract. This information,

which must be provided by the supplier to the consumer, includes; the identity of the

supplier and, in the case of contracts requiring payment in advance, their address;

the main characteristics of the goods or services; the price of the goods or services

including all taxes; delivery costs, where appropriate; the arrangements for payment,delivery or performance; the existence of a right of withdrawal, except where the

Directive provides exemptions, the cost of using the means of distance

communication, where it is calculated other than at the basic rate; the period for

which the offer or the price remains valid; where appropriate, the minimum duration

of the contract in the case of contracts for the supply of products or services to be

performed permanently or recurrently, a clause which is particularly relevant to the e-

learning industry.

A significant right given to consumers by the Distance Selling Directive include the

right to withdraw from the contract, but there are certain exclusions that protect e-

learning firms providing e-learning goods and services. For any distance contract the

consumer is granted a period of at least seven working days in which to withdraw

from the contract without penalty and without giving any reason within seven days,

with the only charge that may be made to the consumer because of the exercise of

his right of withdrawal being the direct costs of returning the goods. The Directive

makes it clear what that there is a difference between distance contracts for goods

and those for services. With regards to goods, the period in which consumers can

exercise their right to withdrawal are from the day of receipt by the consumer where

the obligations laid down and with regard to services are from the day of conclusion

of the contract or from the day on which the obligations set out above were fulfilled if

they are fulfilled after conclusion of the contract, provided that this period does not

exceed a three-month period, which applies if the supplier does not meet the above

obligations. Where the consumer has exercised the right of withdrawal the supplier is

obliged to reimburse the sums paid by the consumer free of charge. The only charge


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that may be made to the consumer because of the exercise of his right of withdrawal

is the direct cost of returning the goods and such reimbursement must be carried out

as soon as possible and in any case within 30 days. Of particular relevance to the

services sector of e-learning industry, the consumer may not exercise the right of

withdrawal for the provision of services if performance has begun, with theconsumer's agreement, before the end of the seven working day period and in the

content sector of the e-learning industry the consumer may not exercise the right to

withdrawal where the goods were made to the consumer's specifications or clearly

personalised or which, by reason of their nature, cannot be returned or are liable to

deteriorate or expire rapidly. E-learning firms distributing their software may wish to

seal their software packages as audio or video recordings or computer software,

which if unsealed by the consumer, also restrict the consumer from withdrawing fromthe contract.

As well as obligations to provide specific information to consumers and confirm their

right to withdrawal where it applies, the Distance Selling Directive also places some

performance obligations on undertakings that enter into distance contracts with

consumers. These include that unless the parties have agreed otherwise, the

supplier must execute the order within a maximum of 30 days from the day following

that on which the consumer forwarded his order to the supplier; where a supplier fails

to perform his side of the contract on the grounds that the goods or services ordered

are unavailable, the consumer must be informed of this situation and must be able to

obtain a refund of any sums he has paid as soon as possible and in any case within

30 days. If the supplier wishes to withdraw from the distance contract in such

circumstances, the cost of returning the goods following exercise of the right of

withdrawal shall be borne by the supplier, and the consumer must be informed of

this.


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European Competition Law

It has been argued that the present e-learning industry of a high number of small to

medium-sized undertakings is slowing the growth of the industry and that as few e-

learning companies can truly do it all they will form strategic alliances to diversify and

strengthen offerings (Hartley, 2001). The form such alliances will take are limited by

competition law, in particular Articles 81 (ex 85) and 82 (ex 86) of the EC Treaty. The

concept of free competition is a fundamental element in the EC Treaty, which

embraces the premise that any restriction on free competition is intrinsically

reprehensible (Hanlon, 2003).

In order for an alliance between two e-learning firms to fall within Article 81 thereneeds to be some affect on trade between Member States and to fall within Article 82

an e-learning firm needs to have a dominant position within the European Union and

not just their domestic market. In some sectors of the e-learning industry, particularly

content, the market for e-learning products is often limited by linguistic and cultural

barriers, in a similar way to the paid-for television market, which the European

Commission found to be an area confined to national markets (Larouche, 1998). With

some broadcasting undertakings being part of the e-learning industry, most notablythe British Broadcasting Corporation (BBC), it could be argued that the market for e-

learning content and services is limited by national boundaries as a result of linguistic

barriers in the same way broadcasting products are. However, the BBC’s educational

content is not restricted to the UK market as English speakers access their online

learning materials from across the continent.

Article 81

Article 81(1) (ex 85(1)) makes illegal all agreements between undertakings,

concerted practices and decisions by associations of undertakings that may affect

trade between Member States and which have as their object or effect the

prevention, distortion or restriction of competition within the common market. The

major point of European competition law is to prevent an altering or distortion of the

competitive balance between undertakings. This distortion of competition is most

clearly seen in horizontal agreements, although Article 81 (ex 85) also applies to

vertical agreements as well (Hanlon, 2003). The nature of horizontal and vertical

agreements has been widely interpreted by the ECJ and can include arrangements


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that are not written down such as gentleman agreements as well as binding

agreements. What is considered to be a concerted practice has been more widely

interpreted by the ECJ than an agreement as it involves the substitution of

substantial cooperation between firms for competition without the conclusion of an

actual agreement. What constitutes a decision by associations of undertakings hasalso been widely interpreted by the ECJ and includes non-binding recommendations.

Exemptions under Article 81(3)

In some circumstances an agreement that is found to be within Article 81(1) may gain

exemption under Article 81(3) where it improves the production or distribution of

goods or promote technical or economic progress, where consumers receive a fair

share of the resulting benefit, where it contains only restrictions which are

indispensable to the attainment of the agreement’s objectives and where it may not

lead to the elimination of competition in respect of a substantial part of the products

in question. The European Commission has simplified this with the interests of small

to medium sized undertakings in mind by granting block exemptions in a number of

different areas. These cover specific types of vertical agreement, while all horizontal

agreements remain prohibited.

Horizontal Agreements

A horizontal agreement or practice is an agreement or practice between or amongst

two or more undertakings at the same level of supply (Lane, 2000). Horizontal

agreements can take many forms, most obviously as price-fixing agreements,

production quotas and market sharing arrangements. In the e-learning industry

horizontal agreements would be those that are made between two or more e-learning

firms that are at the same stage of providing an e-learning product or service, for

example two e-learning firms that provide managed learning environments for the

purpose of post-compulsory education or corporate training that made an agreement

that falls within Article 81(1).

Price-fixing agreements

Article 81(1)(a) strictly prohibits all agreements that directly or indirectly fix purchase

of selling prices. It is generally regarded that such a prohibition of price-fixing

agreements in the interests of consumers as it often results in lower prices (Nitsche,

2001). Since Pronuptia de Paris v Schillgalis [1986] ECR 353 however, it has not

been considered a breach of Article 81 to offer recommendations for resale prices

that do not bind those undertakings purchasing the goods or services.


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Production Quotas

A quota agreement is a type of market sharing whereby competitors fix or limit the

quantity of goods or services they each produce and/or market in order to artificially

adjust supply to demand (Lane, 2000). An example of such an arrangement would be

where a group of e-learning firms agreed to only tender competitively for certain e-

learning public procurement projects, allowing each to share the market.

Market Sharing

Like production quotas and price fixing, market sharing has the outcome of restricting

competition between undertakings. Often market sharing agreements take the form

of agreements to restrict trading to certain territories (Lane, 2000). In the Soda-Ash

case, two firms, namely Solvay and ICI, were found to be operating a market sharing

agreement, which was referred to as the ‘Page 1000’ agreement, which had been inoperation since the 1870s and renewed in the 1940s. Motta (2004) points out that

what is noticeable about this case is that each firm admitted that it had no intention of

invading the other’s home market, but simply because it feared retaliation if it had

done so, which they argued justified a collusive outcome as the result of independent

decisions that made sense from a business viewpoint.

Vertical Agreements

A vertical agreement is an arrangement or concerted practice between two or moreundertakings operating at different levels of the production, distribution or supply

chain. Vertical agreements can take many forms, but most commonly as exclusive

distribution agreements, exclusive purchasing agreements and selective distribution

agreements.

Exclusive distribution agreements

Under exclusive distribution agreements a manufacturer supplies only one distributor

in each territory (Young & Wallace, 2000). Such an agreement is often the most

effective for an undertaking wishing to trade in a Member State other than their own,

as it means they do not have to establish a subsidiary under the freedom of

establishment legislation. For example, a British e-learning firm wanting to distribute

its CD-ROMs to the Republic of Ireland may enter into an agreement with an Irish

distributor to market its products in that territory. The leading case on this type of

agreement was Joined cases 56/64 and 58/64 Consten and Grundig v Commission

[1966] ECR 299, hereafter referred to as Consten and Grundig . In Consten andGrundig the German manufacturer, Grundig entered into an exclusive distribution


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agreement with French distributor Consten, which included that Grundig would not

supply its products to other outlets likely to export to France. The ECJ ruled that this

exclusive distribution agreement was designed to restrict competition impermissibly

so breached Article 81(1). Since Consten and Grundig , a block exemption has been

passed by the European Commission to allow certain exclusive distributionagreements between two undertakings for the exclusive supply of certain goods for

resale.

Exclusive purchasing agreements and licence agreements

Exclusive purchasing agreements enable the supplier to plan sales with greater

precision, ensure that their customers’ requirements are met upon a regular basis

and allow both to limit risk owing to disruption to market conditions (Lane, 2000).

However, while the European Commission has indicated that whereas non-exclusivecontracts for the supply of fixed quantities of industrial raw material which do not last

longer than two years are permissible under Article 81(1) (ex 85(1), an exclusive

supply agreement of such products for five years amounts to a restraint of trade

within the meaning of the Article (EC, 1981). The European Commission has also

granted group exemptions for agreements for technology transfer, comprising both

know-how transfer and license agreements, which means that undertakings such as

e-learning firms do not risk legal action by conducting a regular licensing agreement

(Bekkers, 2001).

Selective distribution agreements

Selective distribution agreements are characterised by supplier selectivity in granting

distributorships whereby the potential for reduced competition arises because the

criteria used to choose distributors may, either intentionally or unintentionally, have

the effect of limiting the number of outlets for the product in question meaning that

those distributors who are selected by the producer would to some degree be

insulated from rivals carrying the same goods (Anon., 2005). An example of a

selective distribution agreement would be where an e-learning firm only supplies its

educational CD-ROMs to distributors to a selective distribution network who provide

after-sales support to their customers and another would be where an e-learning firm

only supplied its managed learning environment to customers with specialist

knowledge of e-learning. Where a manufacturer maintains a selective distribution

network, of which membership is subject to certain qualitative conditions relating to

technical ability, then the network will be lawful so long as the criteria of purely

qualitative tests are objective and objectively applies, such as the condition that


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undertakings have specialist knowledge, adequacy or premises or customer service

(Dalby, 1998).

The De Minimis doctrine

Since the case of Völk v. Vervaecke [1969] ECR 295; [1969] CMLR 273 the De

Minimis doctrine has applied to agreements falling within Article 81(1). A European

Commission notice issued in 1997 clarified the De Minimis doctrine by stating that

agreements involving less than 5 per cent market share for horizontal agreements

and 10 per cent market share for vertical agreements should be regarded as of minor

impact, and outside the ambit of Article 81(1). However, the De Minimis doctrine

does not apply to vertical agreements that have their object as fixing resale prices or

containing territorial protection clauses or horizontal agreements that have their

object price fixing, production or sales quotas, market sharing or sharing sources of

supply.

With regard to Scenario 1 (Annex I), the agreement between the producers of nail

guns can been seen to come within Article 81(1) and outside the provision of the De

Minimis doctrine as despite the parties to the agreement having only 6 percent

market share, the agreements have their objectives as price fixing and contain

territorial protection clauses.

Article 82

Whereas Article 81 (ex 85) is concerned with agreements, decisions and concerted

practices that are harmful to competition, Article 82 (ex 86) is directed toward the

unilateral conduct of dominant undertaking that act in an abusive manner with many

of the more controversial decisions of the Commission being taken under Article 82

(Whish, 2003).

There are three factors that determine whether there has been a breach of Article 82,

which are that there must be a dominant position, an abuse of that dominant position

and a resultant effect on trade between Member States (Stothers, 2001).

Dominant Position

In determining whether an undertaking has a dominant position the market first

needs to be defined and the undertakings share of the market identified. The

definition of the relevant market in both its product and geographic dimension allows

the identification of the suppliers and the customers active on that market and on that

basis a total market size and market shares for each supplier can be calculated on


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the basis of their sales of the relevant products on the relevant area (Korah, 2001).

Since Case 27/76 United Brands v Commission [1978] ECR 207, hereafter referred

to as the United Brands case, a market share of 20 per cent has been considered to

be a dominant position, particularly where that share remains in tact despite efforts

by other competing undertakings.

Abuse of a dominant position

Once it has been identified that an undertaking has a dominant position there needs

to be an abuse of that position for the undertaking to be found in breech of Article 82.

Abuse may be ‘exclusionary’, such as predatory pricing, loyalty rebates and refusal to

deal, or ‘exploitative, such as charging unfairly high prices, tying, or imposing unfairly

low prices on suppliers (Medhurst, 2001).

Predatory Pricing

In Hoffman-La Roche v Commission [1979] ECR 461 it was established that the

practice of using money or resources to sustain losses from charging prices below

cost by a dominant undertaking is an abuse of a dominant position with regard to

Article 82, a practice referred to as predatory pricing. The most notable case on

predatory pricing was case C62/86 AKZO Chemie BV v Commission of the European

Communities [1991] E.C.R. I-3359; [1993] 5 C.M.L.R. 215; [1994] F.S.R. 25,

hereafter referred to as AKZO. In this case the ECJ defined predatory pricing as the

practice of setting prices lower than average variable cost and ruled that a dominant

undertaking has no interest in applying such prices except that of eliminating

competitors so as to enable it subsequently to raise its prices by taking advantage of

its monopolistic position. Another case of predatory pricing was C333/94 Tetra Pak

International SA v Commission of the European Communities [1997] All E.R. (EC) 4

[1996] E.C.R. I-5951 [1997] 4 C.M.L.R. 662, hereafter referred to as TetraPak II . In

this case the ECJ ruled that for the purposes of Article 82 (ex 86), prices set below

average variable costs must always be considered abusive as in such a case there is

no conceivable economic purpose other than the elimination of a competitor, since

each item produced and sold entails a loss for the undertaking and that prices below

average total costs but above average variable costs are only to be considered

abusive if an intention to eliminate can be shown.

Discriminatory Pricing and Fidelity Rebates

Undertakings that produce products or provide services often charge different prices

for those products or services as a result of different market and commercial


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considerations. For undertakings with a dominant position in a particular market it is

possible that their actions may come within Article 82(c), which rules out dominant

undertakings applying dissimilar conditions to equivalent transactions with other

trading parties, thereby placing them at a competitive disadvantage as was found in

the United Brands case. A similar abuse is offering fidelity rebates, whereby adominant undertaking offers price rebates, bonuses or other form of payment in

return for an agreement from a buyer, groups of buyers or agents not to purchase

from their competitors (Lane, 2000).

Refusal to deal or supply

The refusal to deal with a supplier or a customer can amount to an abuse of

dominant position even where it does not lead to a deterioration of the competitive

structure, so much so that where a dominant firm stops, without valid reason,

supplying a well-established customer abiding by commercial custom and whose

orders do not have any abnormal character, this constitutes an abuse (Stuyck &

Vogelaar, 2000).

The first European case to consider refusal to deal was Joined Cases 6/73 & 7/73

Commercial Solvents v. Commission of the European Communities [1974] E.C.R.

223; [1974] 1 C.M.L.R. 309, hereafter referred to as Commercial Solvents. In this

case, there was a refusal to supply nitropropane or its derivative, aminobutanol, araw material for the manufacture of ethambutol. The European Commission found

that the supplier had “a dominant position in the common market for the raw material

necessary for the manufacture of ethambutol” by virtue of its “world monopoly in the

production and sale of nitropropane and aminobutanol”, and that the refusal to supply

constituted an abuse under Article 82. The ECJ confirmed the European

Commission’s finding of a dominant position and their finding of abuse (Stothers,

2001). A refusal to deal may also occur where an undertaking with a dominant

position at one stage of production establishes a subsidiary to supply their product to

and then refuses to supply undertakings competing with that subsidiary that are

dependent on them for a particular product (Lane, 2000). Indeed, the ECJ said in the

United Brands case that an undertaking in a dominant position for the purpose of

marketing a product cannot stop supplying a long standing customer who abides by a

regular commercial practice, if orders placed by that customer are in no way out of

the ordinary.


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Unfair trading conditions

The imposition of unfair trading conditions is also prohibited by Article 82. In the Tetra

Pak II case, the Court of First Instance considered that, where a supplier of

packaging machines requires its lessee to pay to it, at the time of delivery of the

machine or shortly thereafter, an initial rental amounting to the entire value of the

rented machine, this constitutes the imposition of unfair conditions since the lessee

does not benefit from the legal advantages deriving from the right of ownership

although his position is economically comparable to that of an owner (Stuyck &

Vogelaar, 2000). Also in the Tetra Pak II case it was upheld that the practice of tying

the sale of packaging to the sale of the machines also breeched Article 82 (ex 86).

Tying the products of one particular undertaking as was done in the Tetra Pak II case

can be seen in trading conditions where the customer is required to purchase a less

critical product from the same undertaking in order to purchase the critical product or

where the customer is required to purchase an unrelated product in order to receive

the product they want. An example of this sort of tying is in Case T-201/04 Microsoft

Corporation v. Commission of the European Communities [2005] 4 C.M.L.R. 5,

[2005] Info. T.L.R. 179, [2005] E.C.D.R. 19, where the undertaking concerned, which

offers e-learning technology, was found to be tying the sale of their operating system

to the sale of their software for playing multimedia files, something which has been

referred to as compulsory licensing.

Market partitioning

Where a dominant undertaking imposes upon its customers obligations that bring

about a partitioning of the markets, this constitutes an abuse within the meaning of

Article 82, so much so that a clause prohibiting distributors from reselling bananas

when they are still green was condemned as abusive (Stuyck & Vogelaar, 2000).

MergersSince Case 6/72 Europemballage Corp and Continental Can Co Inc v Commission,

hearafter referred to as the Continental Can Case, some mergers have been

regarded as abuses of a dominant position within the meaning of Article 86.

According to this case, mergers are an abuse, if they strengthen a pre-existing

dominant position to the exclusion of all effective competition in a substantial part of

the Common Market (Cheng & Liu, 1995).


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Mergers

It could be argued that the restrictions placed on undertakings in the e-learning

industry by Article 81 is forcing small to medium-sized enterprises to enter into more

substantial agreements to form concentrations, through either taking over or merging

with other undertakings. Some might argue that this is a good thing, as in a time of

increased globalisation undertakings within the European Union need not just

compete with enterprises within the union, but also compete on a global scale with

undertakings in the USA, and the emerging markets in India and China for example.

It could also be argued that small to medium-sized undertakings allow for a flexible

and dynamic market, and that mergers impede innovation and creativity. Whichever

position is right, it is certain that the e-learning industry will have to deal with mergers

more often as the market develops if undertakings are to overcome the restrictions

placed on them by Article 81.

The Merger Regulation

Mergers within the European Union must be carried out in accordance with Council

Regulation 139/2004 of 20 January 2004 on the control of concentrations between

undertakings, hereafter referred to as the Merger Regulation. In the context of this

regulation, a concentration is defined as what arises where a change of control on a

lasting basis results from either the merger of two or more previously independent

undertakings or parts of undertakings, or the acquisition, by one or more entities

already controlling at least one undertaking or by one or more undertakings whether

by purchase of securities or assets, by contract, or by any other means of direct or

indirect control, whole or parts of one or more other undertakings. The Merger

Regulation sets out that the Commission must make an appraisal of concentrations

“with a view to establishing whether or not they are compatible with the common

market .” According to the regulation a concentration which would not significantly

impede effective competition in the common market or in a substantial part of it, in

particular as a result of the creation or strengthening of a dominant position, should

be declared compatible with the common market, whereas a concentration that would

significantly impede effective competition, in the common market or in a substantial

part of it, such as through the creation or strengthening of a dominant position,

should be declared incompatible with the common market.

The Merger Regulation states that a concentration that has a Community dimension

must notify the Commission prior to their implementation and following the conclusion


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of the agreement, the announcement of the public bid, or the acquisition of a

controlling interest. According to the regulation, a concentration has a Community

dimension where either the combined aggregate worldwide turnover of all the

undertakings concerned is more than !5 billion and the aggregate Community-wide

turnover of each of at least two of the undertakings concerned is more than !250million, unless each of the undertakings concerned achieves more than two-thirds of

its aggregate Community-wide turnover within one and the same Member State or

the combined aggregate worldwide turnover of all the undertakings concerned is

more than !2.5 billion, in each of at least three Member States, the combined

aggregate turnover of all the undertakings concerned is more than !ß100 million, in

each of at least three Member States included for the purpose of the calculating the

combined aggregate turnover, the aggregate turnover of each of at least two of theundertakings concerned is more than !25 million, and the aggregate Community-

wide turnover of each of at least two of the undertakings concerned is more than

!100 million, unless each of the undertakings concerned achieves more than two-

thirds of its aggregate Community-wide turnover within one and the same Member

State. The Merger Regulation states that if a concentration does not have a

Community dimension and is capable of being reviewed under the national

competition laws of at least three Member States, the undertakings party to the

merger may, before any notification to the competent authorities inform the

Commission by means of a reasoned submission that the concentration should be

examined by the Commission, but any Member State competent to examine the

concentration under its national competition law may, within 15 working days of

receiving the reasoned submission, express its disagreement as regards the request

to refer the case.

Ancillary Agreements

Essential to restricting competition when undertakings chose to merge and form a

concentration are ancillary agreements. According to Commission Notice 90/C

203/05 the restrictions in such agreements must be necessary to the implementation

of the concentration, which means that in their absence the concentration could not

be implemented or could only be implemented under more uncertain conditions, at

substantially higher cost, over an appreciably longer period or with considerably less

probability of success and this must be judged on an objective basis. The noticefurther states that the question of whether a restriction meets these conditions cannot


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be answered in general terms. In particular as concerns the necessity of the

restriction, it is proper not only to take account of its nature, but equally to ensure, in

applying the rule of proportionality, that its duration and subject matter, and

geographic field of application, do not exceed what the implementation of the

concentration reasonably requires and that if alternatives are available for theattainment of the legitimate aim pursued, the undertakings must choose the one

which is objectively the least restrictive of competition.


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European Intellectual Property Law

An area of EU law that has had a huge and extensive effect on how the e-learning

industry conducts itself is intellectual property law. Referred to in Article 30 (ex 36) of

the EC Treaty as industrial and commercial property, intellectual property rights are

usually granted to a legal or natural person to give them exclusive enjoyment of

valuable property rights throughout the world (Kent, 2001). Intellectual property rights

are very much apparent in the content and technology sectors of the e-learning

industry, with content such as learning materials requiring necessary permissions

before they are used (Worley, 2006).

Copyright

Copyright is one of the artistic and literary properties covered by EU law and is the

one that offers the most protection to the small firms that produce the content and

software in the e-learning industry. Copyright covers many of the original literary

works produced by the e-learning industry, such as instructional materials, instruction

manuals and the databases and computer software that store and display materials,

original artistic works, such as photographs, diagrams, maps and logos, as well asoriginal sound and video recordings. According to Kennedy (2002) the materials

produced by those in the content and services sectors of the e-learning industry

attract copyright protection. Kennedy indicates that historically materials produced by

universities resulted in scholarly lectures, articles and books and the ownership of

course content had not been a contested issue, but with the expansion in e-learning

conducted at a distance academics have started to produce a number of other

copyrighted materials such as multimedia works and videotaped lectures, distributedeither through CD-ROMs or online. The ownership of learning materials has often

been disputed and some undertakings in the e-learning industry are keen to ensure

that the copyright to the content developed by their works belong to them (Kennedy,

2002). In the case of Stephenson, Jordan and Harrison Ltd v Macdonald and Evans

[1952] 69 RPC10 in the United Kingdom there was a dispute between a management

consultant who published his course materials in a book and the management

consultancy that employed him as to who owned the copyright to the materials. It

was held by the court that the copyright belonged to the originator of the works and

not the firm that employed them. Whilst this would suggest that undertakings would


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have to ensure that their contract of employment stated that the copyright belongs to

them and not their workers, subsequent legislation makes it clear that work carried

out during the course of a worker’s employment belongs to the undertaking

employing the worker unless the contract states otherwise.

An overview of the EU Directives relating to copyright

The European Union has legislated with regarding to copyright extensively since the

1990s. Directive 91/250/EEC of the Council, May 14, 1991, concerning the legal

protection of the computer programs has offered the most protection to undertakings

in the e-learning industry, specifically by giving computer programs, such as e-

learning systems, the same legal protection as literary works, including preparatory

work on the software, as well as by clarifying the law with regard to who holds the

copyright, by stating that the author of a computer program shall be the natural

person or group of natural persons who has created the program or, where the

legislation of the Member State permits, the legal person designated as the right-

holder by that legislation, where collective works are recognized by the legislation of

a Member State, the person considered by the legislation of the Member State to

have created the work shall be deemed to be its author; in respect of a computer

program created by a group of natural persons jointly, the exclusive rights shall be

owned jointly and where a computer program is created by an employee in the

execution of his duties or following the instructions given by his employer, the

employer exclusively shall be entitled to exercise all economic rights in the program

so created, unless otherwise provided by contract.

Directive 92/100/EEC of 19 November 1992 concerned rental rights and lending

rights and on certain rights related to copyright in the field of intellectual property

relating to cinematographic or audiovisual work or moving images, whether or not

accompanied by sound, such as an educational video. It set out that the exclusive

right to authorize or prohibit rental and lending shall belong to the author in respect of

the original and copies of his work, the performer in respect of fixations of his

performance, the phonogram producer in respect of his phonograms and the

producer of the first fixation of a film in respect of the original and copies of their film

with the principal director of the work being considered as its author or one of its

authors and allowed Member States to provide for others to be considered as its co-

authors.


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Council Directive 93/83/EEC of 27 September 1993 complemented Directive

82/100/EEC by setting out the coordination of certain rules concerning copyright and

rights related to copyright applicable to satellite broadcasting and cable

retransmission. Directive 82/100/EEC set out that broadcasting right Member States

should provide an exclusive right for the author of a work, such as an educationalprogramme, to authorize the communication to the public by satellite of that

copyrighted work. This protection is of particular relevance to the expanding e-

learning industry as according to Bates & Bates (2005) low income groups who can

benefit from e-learning have been early adopters of entertainment technology such

as satellite and cable TV.

Council Directive 93/98/EEC of 29 October 1993 concerned the harmonizing the term

of protection of copyright and certain related rights within the European Union,covering areas including the duration of author’s rights, cinematographic or

audiovisual works, the duration of related rights, protection of previously unpublished

works, critical and scientific publications, and photographs.

Regarding the duration of author’s rights the Directive 93/98/EEC as amended by

Directive 2001/29/EC set out that the rights of an author of a literary or artistic work,

such as a e-learning program, shall run for the life of the author and for 70 years after

their death, irrespective of the date when the work is lawfully made available to the

public, in the case of a work of joint authorship that term shall be calculated from the

death of the last surviving author and in the case of anonymous or pseudonymous

works, the term of protection shall run for seventy years after the work is lawfully

made available to the public. However, when the pseudonym adopted by the author

leaves no doubt as to his identity, or if the author discloses his identity during the

period referred to in the first sentence, the term of protection applicable is 70 years

after the author’s death. The directive further states that where a work is published in

volumes, parts, instalments, issues or episodes and the term of protection runs from

the time when the work was lawfully made available to the public, the term of

protection shall run for each such item separately and in the case of works for which

the term of protection is not calculated from the death of the author or authors and

which have not been lawfully made available to the public within seventy years from

their creation, the protection shall terminate. With regard to cinematographic or

audiovisual works the directive states that the principal director of a cinematographic

or audiovisual work shall be considered as its author or one of its authors, while

giving Member States the freedom to designate other co-authors, the term of


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protection of cinematographic or audiovisual works shall expire 70 years after the

death of the last of the following persons to survive, whether or not these persons are

designated as co-authors: the principal director, the author of the screenplay, the

author of the dialogue and the composer of music specifically created for use in the

cinematographic or audiovisual work.With regard to the duration of related rights, the amended directive states that the

rights of producers of phonograms shall expire 50 years after the fixation is made,

but if the phonogram has been lawfully published within this period, the said rights

shall expire 50 years from the date of the first lawful publication and if no lawful

publication has taken place within the period mentioned in the first sentence, and if

the phonogram has been lawfully communicated to the public within this period, the

said rights shall expire 50 years from the date of the first lawful communication to thepublic. This area of legislation is becoming particularly relevant to the e-learning

industry as the dividing line between the content and services sectors becomes less

obvious. The adopting of podcasting as an educational delivery method brings

educational providers into the legal definition of phonogram producers. Podcasting by

definition is a means to publish audio content to the world via the Internet, meaning

audiences are able to subscribe to their favourite channels and automatically receive

the latest content in iTunes or a similar client (Stolarz & Felix, 2006). Richardson

(2006) suggests that podcasting as an educational technique can be utilised by world

language teachers, who could record and publish daily practice lesson that students

could listen to at home, or download to their own MP3 players. As a phonogram, a

podcasted audio recording by such a teacher would be protected by copyright for 50

years after it is recorded.

With regard to the protection of previously unpublished works any person who, after

the expiry of copyright protection, for the first time lawfully publishes or lawfully

communicates to the public a previously unpublished work, shall benefit from a

protection equivalent to the economic rights of the author. The term of protection of

such rights shall be 25 years from the time when the work was first lawfully published

or lawfully communicated to the public. With regard to critical and scientific

publications the directive states that member States may protect critical and

scientific publications of works which have come into the public domain and that the

maximum term of protection of such rights shall be 30 years from the time when the

publication was first lawfully published. With regard to the protection of photographs,

the directive states that photographs which are original in the sense that they are the


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author's own intellectual creation shall be protected in the same way as artistic or

literary works and that no other criteria shall be applied to determine their eligibility for

protection and that Member States may provide for the protection of other

photographs.

Designs

Designs like copyright are an artistic property covered by EU law, which cover the

appearance of the whole or a part of a product resulting from the features of, in

particular, the lines, contours, colours, shape, texture and/or materials of the product

itself and/or its ornamentation. In this context ‘product’ means any industrial or

handicraft item, including inter alia parts intended to be assembled into a complex

product, packaging, get-up, graphic symbols and typographic typefaces, butexcluding computer programs, such as educational software, with ‘complex product’

meaning a product which is composed of multiple components which can be

replaced permitting disassembly and reassembly of the product, which can include

educational technology, such as robotics. Covered by Directive 98/71 that

harmonised design rights in the European Union, designs are protected by European

Union Law. The directive, which was published on 13 October 1998, requires

Member States to protect designs by registration, and confers exclusive rights upontheir holders, stating a design shall be protected by a design right to the extent that it

is new and has individual character and a design applied to or incorporated in a

product that constitutes a component part of a complex product should only be

considered to be new and to have individual character if the component part, once it

has been incorporated into the complex product, remains visible during normal use

(i.e. use by the end user, excluding maintenance, servicing or repair work) of the

latter, and to the extent that those visible features of the component part fulfil in

themselves the requirements as to novelty and individual character. According to the

directive, a design should be considered new if no identical design has been made

available to the public before the date of filing of the application for registration or, if

priority is claimed, the date of priority. Designs are deemed to be identical if their

features differ only in immaterial details and the directive states that a design should

be considered to have individual character if the overall impression it produces on the

informed user differs from the overall impression produced on such a user by any

design which has been made available to the public before the date of filing of the

application for registration or, if priority is claimed, the date of priority. The directive


34/62

further states that in assessing individual character, the degree of freedom of the

designer in developing the design shall be taken into consideration.

Patents

Patents are a form of industrial property and covers valuable rights connected with

the production and distribution of goods and services. Whilst the EC Treaty provides

a legal base for harmonising patent laws within the European Union, a separate

treaty, the Convention on the Grant of European Patents, commonly referred to as

the European Patent Convention, governs patents in the EU. The Convention states

that European parents can be granted for any inventions that are susceptible of

industrial

Documents

An investigation into how the European Union affects the development and provision of e-learning services