Incredimail 2012 Annual Report Download - page 34

In this regard, there are still a large number of legislative proposals before the European Union, as well as before the U.S. 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, mandatory consents or affirmations 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 of 1981 (the “Privacy Law”).
Maintaining a database other than in compliance with the Privacy 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 21, 2004.
In addition to the registration obligations under the Privacy Law, the Privacy Law also determines that any request for information
should be accompanied by a notice that indicates: whether a person is legally required to expose such information, or that such exposure is
subject to such person’
s own will and consent; 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 database. It should be stated that violating such requirements can result in imprisonment. The Privacy Law stipulates that an infringement
of privacy is a civil wrong action, and authorizes the court to set compensation of NIS 50,000 (approximately $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 Israeli Copyrights Law of 2007 (the “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 Copyrights Law sets forth the amount
of compensation that a court may award to a claimant without proof of injury, for each copyright or moral right infringement, at NIS 100,000
(approximately $27,000).
On December 1, 2008, Amendment No. 40 to the Israeli Communications Law (Transmissions and Broadcasting) of 1982 (the “
Israeli
Anti-Spam Law”) came into effect. The Israeli Anti-Spam Law prohibits dissemination of commercial e-
mail advertisements, as well as other
forms of electronic advertisements, without the recipient’s prior express consent. The Israeli Anti-
Spam Law applies equally to entities
themselves offering goods or services and entities distributing electronic advertisements on their behalf. Consent may be obtained in writing, by
electronic message or recorded conversation. Advertisers may make a single contact with business recipients in order to solicit such consent.
Recipients may revoke their consent at any time, either in writing or in the same medium used to transmit the advertisement. It is permitted to
distribute commercial promotional electronic advertisements without prior recipient consent where all of the following conditions are met: (i) the
recipient provided his contact information to the advertiser in the course of purchasing goods or services or negotiations for the purchase of
goods or services, and the advertiser provided notice that the details so provided would be used for purposes of disseminating such
advertisements; (ii) the advertiser provided the recipient the opportunity to refuse to receive such advertisements, either generally or of a
particular type, and the recipient did not do so; and (iii) the advertisement relates to goods or services similar to those described in (i) above. In
addition to the consent requirements described above, the Israeli Anti-
Spam Law requires that all electronic advertisements include a clear,
conspicuous notice containing: (i) identification of the message as an advertisement (for email communications, the word “advertisement”
must
appear in the email subject line; in all other electronic advertisements, such identification must appear in the beginning of the advertisement); (ii)
the advertiser’s identity and contact information; and (iii) notification of the recipient’
s right to opt out of receiving such advertisements and
means for opting out (including an email address for email advertisements). Violations of the Israeli Anti-
Spam Law may carry criminal and
civil penalties. Advertisers who disseminate advertisements in violation of the law are subject to a fine of approximately NIS 226,000
(approximately $54,000). Failure to comply with the mandatory notice provisions carries a fine of approximately NIS 75,300 (approximately
$18,000). Managers and individuals working for the advertiser who are responsible for marketing or promotions and who do not take sufficient
measures to ensure compliance with the law may be personally liable for violations of the law and may be subject to a fine of approximately NIS
75,300 (approximately $18,000). There is a statutory presumption that any illegal spam that was sent was sent knowingly, unless proven
otherwise. This statutory presumption of knowingly delivering illegal spam cannot even be challenged under certain instances (such as repeat
offenses or distribution to a randomly selected list of addresses). The Israeli Anti-
Spam Law also creates a private right of action for violations;
in addition to other compensation to which recipients may be entitled, the court is authorized to award statutory damages of approximately NIS
1,000 (approximately $300) per email received in knowing violation of the law. There are also provisions for punitive damages as well as civil
tort liabilities. In addition, the Israeli Anti-Spam Law provides for certifying claims against advertisers who violate the Israeli Anti-
Spam Law as
class-
action lawsuits. In light of the fact that we are headquartered in Israel and have Israeli customers, we are challenged by these rules with
respect to our email campaigns, and non-
compliance would expose us to potential fines and sanction, civil tort claims, as well as potential
reputational damage.
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