Radical Overhaul of the French Data Protection/Anti-Spam Regime as France Implements Two European Directives

Publié le 29/08/2004 par Cyril Ritter

On June 21, 2004, the French “Law on Confidence in the Digital Economy” was adopted. That law contains stringent new provisions on marketing e-mails, as mandated by the 2002 EU Directive on Electronic Communications and Privacy. On July 15, 2004, the French Law on Data Protection (which dates back to 1978) was radically amended in…

On June 21, 2004, the French “Law on Confidence in the Digital Economy” was adopted. That law contains stringent new provisions on marketing e-mails, as mandated by the 2002 EU Directive on Electronic Communications and Privacy. On July 15, 2004, the French Law on Data Protection (which dates back to 1978) was radically amended in order to bring it in line with the requirements of the 1995 EU Data Protection Directive. The amending law is about to enter into force (August 2004). The text of the 1978 Law on Data Protection as amended in August 2004 is available on the website of the French Data Protection Authority (“the CNIL”) at www.cnil.fr.

Both of these legislative changes – concerning direct marketing and data protection respectively – directly impact companies doing business in France. This article outlines the key points of the reform and points to the practical implications arising from implementing the new legal regime.

French Data Protection Law

In 1978, France was the first member of the EU to enact data protection legislation. Since then, however, the law had not been amended. In organizations and authorities believed that the law was impractical and incomplete. In fact, French Data Protection Authority went so far as to exceed the boundaries of its powers by applying the (more stringent and more comprehensive) Directive directly, rather than the law. As a result of the recent amendment of the 1978 law, the French data protection regime is now in line with the 1995 Data Protection Directive, and the French Data Protection Authority (hereinafter “the CNIL”) now has an arsenal of legal powers at its disposal. Below we set out the main changes to the system:

A “Legal Basis” is Required for Processing Data

Processing data (which includes merely collecting data) now requires a legal basis: it is only possible to process data when either (a) the person concerned has expressed his/her consent through a “positive act” (e.g., ticking a box on a questionnaire/webpage); (b) the processing is necessary for the company to comply with its legal obligations; (c) the processing is necessary for the performance of a contract between the company and the person concerned, or for preliminary steps taken at the request of the person concerned with a view to entering into a contract; or (d) the processing is necessary for the purposes of the legitimate interests pursued by the company, except where such interests are overridden by the interests or fundamental rights and freedoms of the person concerned. As yet, there is no guidance from the CNIL or from the preparatory works as to the correct interpretation of these legal bases – although it is stated in a Senate preparatory document that one can expect the “legitimate interests” test to constitute the main legal basis for collecting/processing data, while the requirement of consent would become the exception rather than the rule. “Sensitive” data (i.e., data relating to a person’s health, ethnic origins, trade union membership, and religious or political beliefs) are subject to a stricter regime: except in exceptional circumstances, the consent of the person concerned is required.

Exception to the “Legal Basis” Requirement

Copyright collecting societies may collect personal data – without the need for a legal basis – about the persons who commit copyright fraud, e.g., by illegally downloading music off the internet. This provision is seen by consumer organizations as allowing for the creation of “private” databases of criminal records, which they claim directly contradicts the aim of the law. The law as originally adopted by the French Parliament allowed for the creation of such databases in all economic sectors (for instance, banks would have been allowed to collect personal data about bad payers without a legal basis). But the Constitutional Council thought otherwise. When reviewing the law to ensure its compatibility with the French Constitution, the Council held that allowing all corporate entities to collect personal data without a legal basis was ambiguous, insufficiently precise and entailed too much discretionary power on the part of the entities collecting data. By contrast, the Council upheld the right of copyright collecting societies to collect personal data without a legal basis – for this is warranted by the need to crack down on piracy on the internet and to preserve “intellectual property and cultural creation”.

Processing by Entities Located Outside France may be Subject to French Law

A company that processes data and which is established outside the EU may nonetheless be subject to French data protection law if it makes use of equipment situated in France unless such equipment is used only for purposes of transit through EU territory.

Notifications

Organizations that process personal data must notify the CNIL of their activities unless the company appoints a Data Protection Officer (“DPO”), who is a specially designated employee charged with the task of implementing data protection measures within the company. The appointment of a DPO must be notified to the CNIL. The DPO is in charge of protecting the personal data belonging to the company’s customers and employees, responding to requests for access to the data, and, if necessary, alerting the CNIL of breaches of the law by its own company. In order to ensure that the DPO will be able to exercise effective oversight of its own employer’s data protection practices, the amended text provides that in terms of employment law, the status of DPO has the same level of protection against unfair dismissal as trade union representatives. Transfers of data outside of the European Economic Area (“EEA”) are always subject to notification, however – even if the company in question has appointed a DPO. In this case, the notification is limited to the transfer of data. The amended law also states that the CNIL has the power to adopt “simplified” notification forms for certain types of data processing; the CNIL may also exempt certain types of data processing from the obligation to notify.

Information Obligations

The person from whom data are collected must be informed of the data processing. If the data are collected through a questionnaire (whether on paper or on the internet), then the same page (or webpage) should display the following information: (a) the identity of the company that collects the data; (b) the “purpose” of the data processing; (c) whether the provision of the requested data is “compulsory” or “voluntary” on the part of the person concerned; and (d) the fact that customers have the right to access and amend their personal data.

The following information must also be provided to the person concerned, but not necessarily on the same page/webpage (e.g., presumably, it is sufficient for it to appear in the company’s privacy policy): (e) the consequences for the person concerned of not providing the data; (f) the recipients of the data (e.g., the company’s subcontractors); and (g) the fact that the data will be transferred outside the EEA (if applicable and subject to the specific rules outlined below).

Transfers of Data Outside the EEA

A company that collects personal data can only transfer the data outside the EEA on condition that it can rely on one of the main adequacy mechanisms: (a) the person concerned has given his/her specific and unambiguous consent to the proposed transfer; (b) the transfer is necessary for the performance of a contract between the company and the person concerned, or for preliminary steps taken at the request of the person concerned with a view to entering into a contract; (c) the transfer is necessary for the conclusion or performance of a contract concluded in the interest of the person concerned between the company that controls the data and a third party; (d) the data is being transferred to a non-EEA country whose data protection regime was declared “adequate” by the European Commission; or (e) the “data exporter” has put in place a contract with the “data importer” which is based on the European Commission’s standard contractual clauses for cross-border data transfers (so-called “model contracts”). In essence, these clauses aim to subject the data importer to the European standard in terms of data protection.

Data Processing by Subcontractors

If a company discloses personal data to its subcontractor, their relationship must be governed by an agreement providing that: (a) as regards the processing of the personal data, the subcontractor shall only act upon the company’s instructions; and (b) the subcontractor shall implement all appropriate technical and organizational measures to protect the data against accidental or unlawful destruction or accidental loss, alteration, unauthorized disclosure or access. The company that originally collected the data remains liable for misuse or disclosure of data by the subcontractor, however.

Enforcement

Under the previous regime, the enforcement system was complex and ineffective. The CNIL could refer the case to the local Prosecutor, who would decide whether to initiate criminal proceedings. Even if the case reached the Prosecutor, there was no guarantee that he/she would pursue the case. Therefore, in practice, criminal proceedings were rare and the sentences never reached the level specified in the criminal code (3 to 5 years’ imprisonment and/or a fine of up to 300,000 euros), which were widely viewed as “excessive”. Under the new regime, the CNIL itself has certain enforcement powers: it may issue cease-and-desist orders, and if a company does not comply with such an order, the CNIL may impose on it a fine of up to €300,000. In addition, the CNIL may seek positive injunctions by way of a court order on the basis of urgency. Separately, criminal prosecution could result in a sentence of five years’ imprisonment plus a fine of €300,000.

Transitional periods

Companies that complied with the original version of the 1978 data protection law at the time of its amendment (August 2004) benefit from a “grace period” of three years, i.e., they will have to bring their data processing practices in line with the amended regime before July 2007. However, the new provisions on transfers of data outside the EEA and on the CNIL’s new enforcement powers apply immediately to all companies. There is no transitional period for companies that did not comply with the law in its 1978 version – they have to immediately comply with the amended law.

Direct Marketing/Anti-Spam Law

Once a person’s e-mail is legitimately collected (which requires a legal basis, information obligations and possibly a notification to the CNIL), it does not necessarily follow that that person can be contacted for marketing/advertising purposes. Direct marketing by e-mail is subject to specific rules and in many instances opt-in consent.

The Rule

Since June 2004, French law now requires “opt-in consent” for any unsolicited electronic mail for the purpose of direct “prospection” to physical persons (but not to legal persons such as corporate entities). The unofficial position of the CNIL is that – as under Belgian law – personalized professional e-mail addresses (e.g., [email protected]) are considered as relating to physical persons. Such addresses are therefore protected by the opt-in principle. By contrast, impersonal e-mail addresses (e.g., [email protected]) are considered as relating to legal persons. E-mail marketers are also under the obligation to provide a valid reply e-mail address in every marketing e-mail. They must also ensure that the subject line in every e-mail clearly indicates that it is an advertisement.

The Exception to the Rule

The rule does not apply to existing customers, provided that four conditions are met: (1) the data were obtained in compliance with the general data protection regime; (2) the data were obtained “on the occasion of a sale of a product or service” to the person concerned; (3) the e-mail advertises “analogous” products or services supplied by the “same” natural or legal person;[fn9] and (4) the recipient is “expressly” and “unambiguously” informed of his/her right to opt-out at any stage “by simple means” and “without charge.”

Sanctions

Criminal and/or administrative fines for breach of this provision will be provided for in an implementing regulation. In addition to such sanctions, any person who suffers damages by reason of a violation of the law would be entitled to bring an action for damage. Article 323 of the French Criminal Code remains applicable separately. It provides for substantial penalties, including one to three years’ imprisonment and a fine of €15,000 to €45,000. Arguably, Article 226-18 of the French Criminal Code also applies. It provides for five years’ imprisonment and a fine of €300,000.

Transitional periods

The June 2004 law provides for a “transition period” whereby e-mail marketers will be able to use their lawfully compiled e-mail databases to send one last e-mail, during a six month period after the entry into force of the law (i.e., no later than December 22, 2004), in order to ask the recipients to “opt in.” The unofficial position of the CNIL is that a recipient’s failure to reply to that one last e-mail cannot be considered as “opting in”.