Incredimail 2010 Annual Report Download - page 32

There are still relatively few laws or regulations specifically addressing the Internet,. As a result, the manner in which existing laws and
regulations should be applied to the Internet in general, and how they relate to our business in particular, is unclear in many cases and varies
from county to country. Such uncertainty arises under existing laws regulating matters, including user privacy, defamation, access changes, “net-
neutrality”
pricing, advertising, taxation, gambling, sweepstakes, promotions, content regulation, quality of products and services, and
intellectual property ownership and infringement.
To resolve some of the current legal uncertainty, it is possible that new laws and regulations will be adopted that will be directly
applicable to our activities. Any existing or new laws, regulations or legislation applicable to us could expose us to potential liability, including
significant expenses necessary to comply with such laws and regulations, and could dampen the growth in use of the Internet in general.
When users visit our website or install and use our software, certain "cookies" (pieces of information sent by a web server to a user’
s
browser) may be generated by us and our advertisers and may be placed on our customers’
computers. While we believe that our use of cookies
does not result in personal identification, it has been argued that Internet protocol addresses and cookies are intrinsically personally identifiable
information that is subject to privacy standards. We cannot assure you that our current policies and procedures would meet these restrictive
standards. There are no specific laws restricting the use of such cookies in the United States; while some courts previously questioned whether
placement of cookies on a user’s hard drive is permissible without the user’s consent, no liability has been found.
We post our privacy policy and practices concerning cookies and the use and disclosure of user data on our websites. Our website
informs users both through a brief summary and a complete privacy policy what information we collect about them and about their use of our
services. We also provide users with the opportunity to opt out of receiving certain communications from us.
Any failure by us to comply with our posted privacy policy, U.S. Federal Trade Commission requirements or other domestic or
international privacy-
related laws and regulations could result in proceedings by governmental or regulatory bodies that could potentially harm
our business, results of operations and financial condition, or result in private civil actions for damages and equitable relief. In addition, abuse by
third parties of the data we collect could potentially subject us to liability.
In this regard, there are a large number of legislative proposals before the European Union, as well as before the United States Congress
and various state legislative bodies, regarding privacy and other issues related to our business. Other jurisdictions could also adopt laws and
regulations that could adversely impact our company and business. It is not possible to predict whether or when such laws, regulations and
legislation may be adopted, and certain proposals, if adopted, could harm our business through a decrease in user registrations and revenues.
These decreases could be caused by, among other possible provisions, the required use of disclaimers or other requirements before users can
utilize our services.
Israel
Our database, which includes a database of registered users, falls within the definition of a database that requires registration under the
Israeli Protection of Privacy Law 1981. Maintaining a database other than in compliance with this law may subject the owner, holder, manager
and operator to criminal liability and civil liability. We registered our database with the Data Base Registrar on June 20, 2004.
In addition to the registration obligations under the Israeli Protection of Privacy Law –
1981, the Israeli Protection of Privacy Law also
determines that any request for information should be accompanied by a notice that indicates: whether the delivery of information depends on
the user consent (or is it mandate); the purpose for which the information is requested; and to whom the information is to be delivered and for
what purpose. The law also determines that any person is entitled to inspect any information about him which is kept in a certain data base. It
should be stated that violating such requirements can result in imprisonment liability. The law stipulates that an infringement of privacy is a civil
wrong action, and authorizes the court to set compensation of NIS 50,000 (approximately USD 14,000) without proof of injury. The database
registrar has been granted with wide authorities in event of violation of the provisions of the law, such as canceling the registration of a certain
database.
The new Israeli Copyright Act of 2007 had commenced on May 25, 2008, replacing the old copyright law. The Israeli Copyrights Law
protects, among others, artistic works, as well as sound recordings and computer programs, foreign work and moral rights (the right of paternity
and the right of integrity). The Israeli Copyrights Law set forth the amount for compensation that a court may award to a claimant without proof
of injury, for each copyright or moral right infringement to NIS 100,000, (approximately USD 28,000).
25