Update | IP/IT: Information in the cloud, consumer rights directive

Social media prosecutions

Prosecutions of individuals who have just been having a laugh on Twitter when a member of the public with too thin a skin has chosen to complain have been widely regarded as excessive and unfair on the harmless joker. It is therefore with much pleasure it can be reported that the Crown Prosecution Service (CPS) has drafted interim guidance which ought to restrain the CPS from the worst of such prosecutions and allow people their harmless banter. Launched on 19 December 2012, the consultation closed on 13 March 2013 ?and is available on the CPS's website ?(www.cps.gov.uk).

Until a clearer picture emerges, users of social media are well advised to exercise significant caution before posting controversial content.

Inventive steps

In December the Court of Appeal heard an appeal in the case of Novartis AG v Generics (UK Ltd) (/ Myylan) [2012] EWCA Civ 1623 (12 December 2012). Myylan had managed to overturn a patent owned by Novartis on the grounds it lacked 'inventive step' (one of the requirements of the Patents Act 1977) and held that the patent was conceptually obvious too. Novartis appealed. The Court of Appeal did not allow the appeal and the patent stays revoked. The court emphasised that the question is whether the patent was obvious at the priority date. Certainly those involved with patent litigation will find this case worth reading.

Unpredictable trademark

In November a community trademark, NOW was held valid and did not infringe Sky's NOW TV in Starbucks (HK) Ltd and Ors v British Sky Broadcasting Group plc and Ors [2012] EWHC 3074 (Ch).

The High Court's view was that the average consumer would know that NOW was being used to describe an immediate television service and rejected passing off claims too. There was no confusion either. This case shows how unpredictable trademark and passing off can be but is consistent with earlier case law.

Survey evidence

Many IT lawyers will remember the litigation over M&S buying Google adwords 'interflora' so that those searching the term may pull up M&S in their searches for flowers online. The European Court of Justice has already held that that is only an infringement of trademark law if consumers are confused which many will not be if what emerges on the search is a word very different from Interflora.

The latest decision on the topic, Marks and Spencer plc v Interflora Inc and Interflora British Unit [2012] EWCA Civ 1501, 20 November 2012, is part of the continuing litigation and was purely about admitting survey evidence. The Court of Appeal upheld M&S's appeal here in November on the issue. If ever involved in a case with survey evidence it will be useful to read this decision as the court clarified when a survey will be admitted, admitting one even if it may not be statistically reliable.

E-books and competition law

Some of you may have received a Kindle or other e-reader for Christmas. The European Commission has been looking at alleged infringements of EU competition law in relation to publishers and Apple in this field and in December accepted undertakings from the companies concerned to end the case.

In December 2009, at least these four publishers and Apple started to discuss Apple's entry into the e-book market and its conditions. Competition lawyers would usually advise competitors not to discuss issues such as pricing with each other ever. The EU believes that 'Apple and the four publishers seemingly shared the goal of limiting retail-price competition. To achieve this goal, they agreed in January 2010 jointly to switch the sale of e-books from a wholesale model, where the retailer is free to set the price, to an agency model where the retail price of e-books is determined by the publishers themselves. This switch was done according to the same key terms and on a global basis.'

The commission objected because this was apparently a joint decision by the companies. It is collective and collusive behaviour which will breach article 101 TFEU (and the Competition Act 1998 in ?the UK). The parties seemed to come up with the same terms. Competition lawyers are often asked about most favoured customer clauses.

One to one between supplier and dealer they usually do not have an anti-competitive effect particularly if market shares are low. The EU said: 'In particular the agency contracts with Apple included what can be called a 'most-favoured customer' clause for retail prices. According to this clause, if any retailer sold an e-book at prices lower than that on Apple's iBookstore, the publishers would have to match that lower price on Apple's store, further lowering their revenues.'
This had an anti-competitive effect and the companies agreed to terminate agency agreements and accept other restrictions ?on their conduct.

ICO and cloud computing

The Information Commissioner's Office (ICO) has published guidelines on cloud computing for businesses. We have already reported that the EU is consulting on a similar move.

More and more businesses are looking to use cloud computing, with the economies of scale they offer giving access to a range of computer technologies and expertise that would be difficult to afford in-house. However the ICO is concerned that many businesses do not realise they remain responsible for how the data is looked ?after, even after passing it to the cloud network provider.

That's prompted the ICO to produce ?a guide to cloud computing (see ?www.ico.gov.uk), to help businesses ?comply with the law. The guide gives ?tips including:

? seek assurances on how your data ?will be kept safe. How secure is the ?cloud network, and what systems ?are in place to stop someone hacking ?in or disrupting your access to ?the data?

? Think about the physical security of the cloud provider. Your data will be stored on a server in a data centre, which needs to have sufficient security in place.

? Have a written contract in place with the cloud provider. This is a legal requirement, and means the cloud provider will not be able to change the terms of the service without your agreement.

? Put a policy in place to make clear the expectations you have of the cloud provider. This is key where services are funded through adverts targeted at your customers: if they're using personal data and you haven't asked your customers' permission, you're breaking data protection law.

? Don't forget that transferring data internationally brings a number of obligations '“ that includes using cloud storage based abroad.

Speaking as the guide was launched, author Dr Simon Rice, ICO technology policy advisor, said: 'The law on outsourcing data is very clear. As a business, you are responsible for keeping your data safe. You can outsource some of the processing of that data, as happens with cloud computing, but how that ?data is used and protected remains ?your responsibility.

'It would be naïve for an organisation to take the attitude that these guidelines are too much effort to simply store some data in a different place. Where personal information is involved, the stakes are high and the ICO has already demonstrated it will act firmly against those who don't meet data protection laws.'

The ICO recently issued a monetary penalty of £250,000 to Scottish Borders Council, after it failed to properly manage a company it had employed to digitise pension records. The council did not have a contract with the contractor, and hadn't made the necessary security checks.

Rice added: 'Figures show that consumers are concerned about how secure their data is when they use cloud storage themselves. It takes little imagination to consider that businesses not reflecting those concerns will quickly find themselves losing customers' good will.'

A recent online YouGov survey commissioned by the ICO found that 46 per cent of UK adults online who use cloud storage are concerned about the security of their information in cloud storage.

The survey also found that only 39 per cent of adults online realised that social media used cloud storage to store personal data, while 46 per cent did not realise that by hosting their information on cloud servers, their information could be being stored anywhere in the world.

Consumer rights directive

A consultation on the implementation of the Consumer Rights Directive 2011/83/EU (CRD) just closed at the Department for Business (see www.bis.gov.uk). The provisions in the CRD will apply, subject to some limited exceptions, to all contracts for sales of goods and services by traders ?to consumers

The CRD's focus is on:

? ensuring transparency of information, in particular with regard to pre-contractual information for distance and off-premises contracts (but also for other goods and services contracts);

? ensuring there is express consent from the consumer for any additional payments;

? cancellation rights for distance and off-premises contracts;

? prohibiting excessive fees for paying the trader '“ the subject of a separate consultation to effect early implementation of this provision; and

? prohibiting excessive phone charges for consumers contacting traders about existing contracts.

It also updates legislation to clarify the cancellation rights and obligations of buyers and sellers of digital products.