Naked Law

Night night Naked Law

This is our last post on Naked Law. If you're still a subscriber, you'd be forgiven for being surprised to hear from us. You may even have forgotten we exist.

Well exist we (the writers) still do. In the months since our last post, we've been living in a sort of cocoon, undergoing a miraculous transformation. We are now ready to emerge in our triumphant imago phase ... in form of a new blog.

So the Naked Law team can now be found writing over at M&R's Technology Law Update, our new blog for technology businesses. Our ranks will be swelled by the addition of other lawyers who work for technology businesses (we've even allowed one or two corporate finance lawyers to join in). If you're in or interested in the tech sector, we hope you'll join us.

Cookies – ‘This isn’t going away. It’s the law’

Now you may be getting bored by this point about people harping on about the changes to the law on cookies and it seems like even the public are starting to notice that something’s going on (see this list of the top 10 ‘What is…? searches on Google this year), but we have had some updated guidance from the Information Commissioner’s Office this week. It rather (un)helpfully points out that the new requirements ‘cannot be ignored’…. 

From a brief read, the guidance doesn’t seem to add much to what we already know, for example, I think people were already pretty clear that ‘first and third party advertising cookies’ were unlikely to fall within the ‘strictly necessary’ exemption from obtaining consent.

One thing that did make me laugh though was the FAQ ‘can I copy the Information Commissioner’s solution?’ I would suggest not, given that the ICO banner asking you to accept use of cookies is largely redundant – you can carry on using the site, and the ICO will store cookies without you actively consenting. Not to mention that its pretty ugly.

Something that particularly annoys me in Christopher Graham’s ‘half term report’ (which accompanies the guidance) is his comment that some organisations have found solutions ‘that really work’, but he cannot tell us what these specific products or services are. Its like dangling a carrot on a stick. Surely, if there are some good examples of compliance it would be a good idea to share them?

On the other hand, given the amount of organisations failing to take significant steps towards compliance yet, it seems that the risk of enforcement action being taken against you come May 2012 could be quite low - as long as you look like you are ‘trying to get there’. Then again who really knows what's likely to happen in May?

I'm sure we haven't seen the end of this yet....

I confirm that I agree to improve consumer rights online

In a recent move (which seems to have completely passed me by until now), all 27 EU countries agreed to adopt a new Consumer Rights Directive, which focuses in particular on strengthening consumer rights in online transactions.

This press release from Brussels sets out ten perceived benefits of the new Directive and, in conjunction with the well-publicised changes to the rules on the use of website cookies in the Privacy Directive, reinforces the EU’s determination to improve consumer rights online.

So what are the main changes in the Directive that website operators should be aware of? A few of the interesting ones are as follows:

1. The use of pre-ticked boxes on websites will be banned.

In approach that is very similar to the new stance on use of cookies, consumers must now explicitly accept any “additional services” offered by website operators during an online purchase process by actively clicking on the relevant tick box, rather than having the boxes automatically “pre-ticked”, as is often the case currently.

2. Excess surcharges for the use of credit cards and hotlines will be stopped.

Retailers will not be able to charge consumers more for paying by credit card (or other means of payment) than it costs the retailer to offer such means of payment in the first place, and hotlines will not be able to charge more than the basic telephone rate for telephone calls.

3. Elimination of so called “cost traps”.

The aim is to target get rid of hidden charges and costs on the Internet where consumers are tricked into paying for so called “free” services, such as horoscopes or recipes. Consumers will need to explicitly confirm that they understand they will need to pay to access the service.

 4. Better information about digital content.

The Directive aims to improve the details retailers give about compatibility of digital content with hardware and software and any technical protection that applies to the content, such as limits on the right for consumers to make copies.

Although these changes will not catch the online Christmas rush this year - the Government having up to two years to implement the new Directive at national level - website operators might want to start considering now what the impact will be on the way they operate their websites.

Has the sky fallen in for satellite broadcasting of sports events?

The European Court of Justice's decision (commented at the BBC here) in FAPL's case against the pub manager, Ms Murphy, could just undermine how satellite broadcasters maximize their revenues.

A while ago Ms Murphy was successfully convicted for using an imported Greek satellite decoder to screen the Greek version of UK Premier League football matches in her pub in Portsmouth. Good for customers and the pub you might say, but the FAPL thought this was not fair play. Ms Murphy applied to set aside her convictions -- and the matter has gone all the way to the ECJ. Their decision is that it is just fine to import Greek satellite decoders -- even if the user was less than frank about who or where they were from or what they were going to use them for, so they can be used in the UK (assuming you can see the relevant satellite).

There is a twist. It's ok to screen the football match - that's not, the ECJ say, protected by copyright. But screening the creative surrounds -- commentary, graphics, etc. added by the supplier could be a problem. So for the future can the FAPL enmesh in their creative content so intricately that it could defeat the possibility of separating out the football? Or would that exercise be seen to be an abuse of a dominant position, as being deliberately designed to prevent independent viewing of the football content?

The ECJs decision is on a reference. It is still left for the English High Court to sort out some of the details. More news on this anon.

“Congratulations and celebrations” for Cliff Richard, and other worried musicians

A couple of weeks ago, the EU Council voted to extend the copyright term for sound recordings from 50 years to 70 years (with composers’ copyright protection already subsisting until 70 years after their death). This is good news for bands such as The Rolling Stones, The Who, and the Beatles, whose copyright protection was about to expire, as it means that they will continue to receive royalties for their songs further into their retirement. But what will the wider impact be?

Once copyright protection comes to an end, anyone can use the songs in any way they like without having to obtain consent from the copyright owner, for example in remixes or spoofs. As Abba star Bjorn Ulvaeus put it, “Now I won’t have to see Abba being used in a TV commercial…” It also means of course that the performer and/or record label fail to receive any further royalty payments.

This is a victory in a long-running campaign by record companies and artists to try and extend the life of copyright protection. This has come about because people are now living a lot longer, and in the case of many famous musicians like Cliff Richard, they are likely to outlive their copyright protection in their earliest hits (which is why the campaign as been called “Cliff’s Law”).

In 2006 and 2008 the UK campaign failed in its attempt to persuade to the government to increase copyright protection to a minimum of 95 years, which would have brought the UK into line with America. Although the Hargreaves Report on IP and Growth (see earlier post on this here) recommended changes to the current system, for much the same reasons as those stated by the Council of the European Union that performers “generally started their careers at a young age”, and as such the 50 years of protection “did not protect their performances for their entire lifetime..” It has not however, received unanimous support from all European governments, with Belgium and Sweden amongst others protesting.

Of course, the EU Council’s ruling will now mean that domestic copyright laws need to be amended to incorporate the modified directive 2006/116/EC by 2014.

Now, while you can’t really argue with the intention here, it has been suggested by critics that the changes will only really benefit a few very successful individuals.  A large amount of sound recordings probably disappear into the mists of time long before the current 50 year protection expires, so a further 20 years of protection is not likely to provide much of an increase in royalties. And of course, record companies are more likely to be receiving the royalties (or a higher percentage at least) than individuals in most cases.

The Beatles will be relieved though, as their first hit single, Love Me Do, will reach its 50th anniversary in 2012. I'm sure they will be looking to renew the lease on their "Yellow Submarine" until 2033!

Make-up time for L'Oreal and eBay?

Last week saw a preliminary ruling by the European Court of Justice (ECJ) in the long running legal battle between L’Oréal and eBay in the UK in relation to the sale of various L’Oréal products by individuals who were not authorised distributors of L'Oreal via eBay stores.

L’Oréal distributes its products through a closed network of authorised distributors and issued a High Court claim arguing that eBay was involved in trade mark infringements committed by its sellers (who were unauthorised distributors of L’Oréal products). L’Oréal also took issue with eBay’s use of keyword searches (which were identical to its trade marks) and with sponsored links to adverts for counterfeit items.  So back in 2009, the High Court asked the ECJ to clarify the position on the liability of companies operating internet marketplaces for trade mark infringements committed by users.

On 12 July we finally got to hear the ECJ's judgment. The main points to note are as follows:

• EU trade mark rules (and protection) will apply to branded products located outside of the European Economic Area (EEA) if the offers for sale and/or advertisements of those branded products are targeted at consumers within the EEA.
• A trade mark owner can prevent branded products that have been removed from their packaging being resold where (i) "essential information", such as the identity of the manufacturer, is lost as a result; and (ii) the removal of the packaging has damaged the image of the product and the reputation of the mark.
• Online marketplace operators can be prevented from using keyword searches identical to a trade mark to advertise products bearing that trade mark if it is difficult for reasonably well-informed and observant internet users to ascertain from the advertising that the products do not originate from the trade mark owner or any of its authorised distributors.
• The operators of online marketplaces do not 'use' trade marks if they provide a service which consists of simply enabling sellers to display branded products on their websites, but they cannot argue that they are simply storing information on their websites (and therefore avoid any liability for trade mark infringement) where they provide assistance to optimise the presentation of or promote the items being sold (such as eBay's "Featured Item" tool). They will also be liable if they should have realised that the “offers for sale in question were unlawful and … failed to act expeditiously” in removing or disabling access to the advert in question.
• National courts should be able to grant injunctions against online marketplace operators in order to end infringements of the intellectual property rights and to prevent further infringements of "that kind". However, the injunctions must not create barriers to legitimate trade and should only be proportionate and dissuasive.

Private sellers will not be be affected by this ruling as the ECJ has said that this only applies to sellers acting “in the course of trade”. However this is clearly not good news for eBay (or any other online marketplaces), which is going to have to be much more proactive in the operation of its take down procedure and careful of how it advertises products in future.

One - nil to the trade mark owners then?

ICANN now create my own top level web domain…

ICANN announced on the 20^th June 2011 that they have formally ratified the decision to open up the .com world to .anything, .everything and .everyone. Well anyone with $185,000 in their back pocket and a further $25,000 every year for renewal. However, the decision does raise some interesting questions.

Firstly, how easy will it be to have your own top level domain? The answer is - not particularly. You will have to have a legitimate claim to the domain, so for example, Tesco would not be able to buy .love and hold online dating websites to ransom. You will also have to have a significant level of IT protection - your average home PC with Norton Anti-virus software will obviously not be able to host a top level web domain. The other thing that has to be considered is intellectual property protection. As we mentioned previously, someone’s existing trade mark can be an obstacle and the big brands will presumably be making sure that no-one else is able to register and take advantage of their reputations.

Secondly, what sort of money spinner will this be? Will this just end up being another way for the big brands to extend their dominance, or will it be a business opportunity for all if you are lucky enough to acquire the most sought after top level domain? Cue ‘suffix wars’ as companies compete to buy the domain that relates to them, for example, News International (owners of the Times and the Sun) v Associated Newspapers (owners of the Daily Mail and the Metro) trying to buy .news. And spare a thought for the existing owners of top level domains such as the Island of Tuvalu. Its current GDP is massively supported by .tv but presumably that will be worth significantly less when someone buys .tele.

Finally, what will the impact of this decision actually be? Every business will continue to have a .com, and it is most likely that when you type in tesco.food, it will just redirect you to the tesco.com website or vice versa. So is there any point in paying the massive amount of money it will cost for a top level domain? If you ask Microsoft whether there was any point in buying the Microsoft.co.uk domain name, the response would be pretty obvious.

It won’t be long before children have to start learning an extra meaning of suffixes…

Hargreaves review: changes recommended to move UK IP laws into the digital age

A high-profile review by Professor Ian Hargreaves has concluded that the UK's current IP framework is falling behind in the current climate of digitalisation and must adapt.  Haven't we heard that somewhere before?

10 recommendations for change were made in the report.  These include the creation of a digital copyright exchange to make simplify procedures for licensing copyright-protected works, the introduction of a general right to use works where the author cannot be found, and limiting the scope of copyright so that activities such as format shifting, parody, non-commercial research and library archiving no longer amount to infringement. 

Permission to format shift (which currently amounts to copyright infringement in the UK) would be particularly useful for those of us who recently been given a new iPod having spent years building up a stellar collection of CDs, and the permission to parody would prevent YouTube followers being denied the delights of classic spoofs such as "Newport State of Mind" (a parody of Jay-Z's "Empire State of Mind") or the law-inspired version, "Through Court: Entire Weight Off Mind" (yet to be written).

This Naked Lawyer was also interested to read Professor Hargreaves' recommendation that the IPO should draw up plans to improve accessibility of the IP systems to smaller companies who will benefit from it, and that this should involve access to lower cost providers of integrated IP legal and commercial advice... Companies requiring good value integrated IP and commercial advice should be looking no further than Mills & Reeve! 

To reassure any copyright holders concerned about the impact of these recommended changes, Vince Cable (Secretary of State for Business, Skills and Innovation) said that the "review isn't about sacrificing the interests of Britain's creative industries to those of Google" but is "about reforming our system to stimulate both technology and content creation". 

There has not yet been a formal response by the Government to the review, but keep your eyes peeled to see whether the Government decides to implement any or all of the recommendations in the review - we'll certainly let you know if they do!

Making a meal out of cookies

I have just been pointed in the direction of the new-look ICO website, which now sports this banner at the top of the page (I've added the bold):

On 26 May 2011, the rules about cookies on websites changed. This site uses cookies. One of the cookies we use is essential for parts of the site to operate and has already been set. You may delete and block all cookies from this site, but parts of the site will not work. To find out more about cookies on this website and how to delete cookies, see our privacy notice.

I accept cookies from this site. []

I think most users would agree that the new look is pretty ugly.  I think web designers would be sacked if they came up with it.  I'm not sure that clients would be very pleased if their lawyers told them to do it either.  And worst of all, it doesn't even seem to fix the problem (note the giveaway confession: "one of the cookies we use ... has already been set").

In fairness to Christopher Graham, the Information Commissioner, it's not wholly his fault that he's ended up in this mess.  He didn't write the Directive that says that website operators can't use cookies unless they have consented (ie before the cookie is installed).  He just had to deal with the backlash from everyone who runs a website (I rather enjoyed this rant from Struan Robertson, then editor of Out-law.com, calling the new law "breathtakingly stupid").

UK law already fudges the issue.  The EC Directive doesn't say that browser settings are a legitimate way to get consent but the UK Regs implementing the Directive say:

(3A) For the purposes of paragraph (2), consent may be signified by a subscriber who amends or sets controls on the internet browser which the subscriber uses or by using another application or programme to signify consent.

I'm not sold on this at all - if most users don't read their browser settings, isn't it stretching the legal meaning of consent to argue that failing to change a browser setting can amount to consent?  Consent has to be informed, specific, freely given and must involve some positive action on the part of the consenter.  Surely failing to untick an option hidden away in some options menu in your browser won't work ... ?

The Information Commissioner has been praised for being "pragmatic" in his interpretation of the law - though that sounds like a euphemism for "not doing what the Directive says" to me.  Today, he's being even more "pragmatic" and giving website operators a year of non-compliance before he'll do anything about it.

I thought this was also an opportunity to roll out in the post title an old line I wrote in an article in 2003, which I suppose goes to show that the legislators have still not got to grips with what to do with cookies.

Breaking News - Challenge to the Digital Economy Act is unsuccessful

We mentioned back in December that BT and Talk Talk had been granted a judicial review of the Digital Economy Act.

Well today we’ve heard that the High Court has rejected most of the claims put forward by the ISPs, including that it was ‘rushed through’ Parliament before the election.

The Judge, Mr Justice Parker, did agree that the obligation on ISPs to cover 25% of the costs of enforcing the new regime was unlawful, but this will have little effect on the implementation of the Act in practice. As decision has only just been announced in the High Court we haven’t been able to get a copy of the judgment yet, but see here and here for more information about the ruling.

And don’t forgot of course that this still isn’t the end of the Digital Economy Act saga - Ofcom are currently in the process of reviewing whether the obligations on ISPs to block access to websites involved in copyright infringement are feasible, so there’s still more to come from this yet….