Mills & Reeve: Technology Law Update

Thinking about IP

At the beginning of October, I posted a blog post on the Mills & Reeve health commissioning portal on transferring intellectual property out of primary care trusts (PCTs) which are due to be dissolved on 1 April 2013. The Department of Health has since then issued guidance for PCTs and SHAs which can be accessed here.

The guidance documents set out information for the transfer of intellectual property to new and existing NHS organisations (“Receivers”) prior to 1 April. They will not be applicable to those assets that will not transfer nor to organisations which will not be part of the Department of Health or NHS from 1 April 2013.

In summary the guidance states that IP will be transferred in the following ways depending on which body will receive the functions supported by the transferred IP:

• IP owned by SHAs will either transfer to the NHS Commissioning Board or other appropriate Receiver;
• IP owned by PCTs will transfer to a nominated Receiver; and
• if more than one body requires the IP for the performance of its functions, the nominated Receiver should grant a non-exclusive perpetual licence for a nominal fee to such other Receiver(s) and the Receivers will need to agree who the nominated Receiver should be in this instance.

Intellectual property currently being utilised by PCTs is likely to include intellectual property in medical equipment, software and databases.

The guidance recommends that PCTs should consider whether there are any third parties may have any rights or interests in the intellectual property they are transferring as part of the NHS Transition. Businesses involved in supplying goods or services to PCTs should however consider taking stock themselves of whether they have any intellectual property rights which might be affected by the transition and seeking appropriate legal advice.

Facebook, privacy and reputational damage

The High Court’s recent analysis of the impact of private Facebook postings in Smith v Trafford Housing Trust is interesting not only because of the controversial nature of the subject matter, but also for the line it draws between private and work-related social media activity. It will be of particular interest to employers, such as technology companies, which have a high social media profile.

Most cases where employees are disciplined for what they say on social media end up as unfair dismissal cases in the employment tribunal. Mr Smith was subject to a disciplinary demotion, but missed the unfair dismissal deadline. So he elected to bring proceedings for breach of contract. The key question was whether two moderately-worded postings on his Facebook wall opposing gay marriage in church were in breach of his employer’s code of conduct which forbad activities which could bring it “into disrepute”.

The judge held that even though Mr Smith could be identified as an employee of the Trust, and his friends included over 40 of its employees, the views expressed were clearly in a private capacity and could not be regarded as damaging to the Trust’s reputation. This contrasts with several employment tribunal decisions involving household names such as Asda, Somerfield and Apple. Up to now it has generally been accepted that private postings on social media which show the employer, its customers or its products in a bad light are acts of misconduct, particularly if they are expressly forbidden in its social media policy, though in some instances dismissal has been held to be too severe a sanction.

What all these cases have in common is the recognition that private comments on social media can reach a wide audience even if restricted privacy settings are chosen. However Mr Smith’s case may show that there is a limit to how far employers can police employees’ views expressed on Facebook and the like. Mr Smith’s case may encourage future tribunals to draw the line at the private expression of political or religious views, particularly by junior members of staff, even if these may reach a relatively wide audience and conflict with the public position of the employer on that issue. It can also be linked with the recent decision of the European Court of Human Rights (discussed in our posting here) which said that our domestic law does not currently provide sufficient protection for freedom of association, particularly with parties expressing controversial or unpopular views.

Suspend your disbelief – online copyright infringers not feeling threatened

The tentative implementation of the Digital Economy Act 2010 continues, and a new report from Ofcom outlines the state of play in respect of online copyright infringement. The DEA acknowledged the special role that ISPs play (or could play) in controlling or influencing their subscribers’ use of the net, and intends that Ofcom will produce a code setting out rules for ISPs to follow in relation to notifying their subscribers of allegations of copyright infringement. Ofcom’s full report is here.

Some key findings that caught my eye are:

1. 47% of all computer software products consumed online were estimated to be illegally obtained;
2. Only 22% of 471 people surveyed said that receiving a letter from their ISP threatening them with suspension of their internet access would put them off infringing copyright;
3. One in six internet users over the age of 12 are estimated to have downloaded or streamed online content illegally over the tested three month period; and
4. 44% of all internet users said they were either ‘not particularly confident’ or ‘not at all’ confident in terms of what is legal and what isn’t online.

The current proposal for Ofcom’s initial anti-piracy code is here. Technical measures such as suspension of internet connections are still a way off. No doubt businesses that rely on online content and digital product distribution will be interested to know how accurate that 22% figure turns out to be on a grander scale once the initial code is implemented and notifications start going out.

Could almost every website on the planet really be in legal jeopardy?

The publication of a Nevada court judgment has led to some sensationalist headlines about the validity of website terms of use. For example, the Business Insider website has announced that "Almost Every Website On The Planet Could Be In Legal Jeopardy". So we thought we'd better comment on this.

The Nevada court's conclusion that an online retailer (Zappos.com) could not rely on an arbitration clause set out in its website terms of use when challenged by individuals who had purchased goods through the website was based on the fact that these individuals had never been required to indicate their agreement to the website terms when using the website and making their online purchases.

Online retailers are already strongly advised to require users to click to agree to their website terms and privacy policy at the point of sale and whenever personal data are collected from the user. If Zappos had taken this step, then the Nevada court's judgment would almost certainly have been different.

However, requiring website users who just visit your website to browse content (without making any purchases or submitting personal data) to click to agree to website terms of use would most probably put people off browsing your website. After all, it is established practice for websites to simply have terms of use applicable to browsing users included in a link on each website page. In light of the 2009 Swimming Pool & Allied Trades Association case (as previously discussed on Naked Law) and the ICO's guidance on getting consent to the use of cookies, under English law it may be sufficient to include a prominent link to your website terms and a statement that if the user clicks through to another page on the website, this will be taken as an indication of the user's agreement to the website terms of use.

Ultimately, the steps taken to obtain agreement from people just browsing your website should be proportionate to the likelihood that you will need to rely on your website terms against those people.

Registered trade marks - are they safe?

A recent opinion from the Advocate General on the priority of one registered Community trade mark (CTM) over a later registered CTM makes worrying reading for the owners of registered trade marks...

So, you've managed to successfully register your trade mark, and you've been dutifully making sure you use the mark in exactly the same format and style (and for the classes of goods and services) as set out in your registration. You'd think you'd be in a relatively strong position if somebody came along and tried to attack your registration wouldn't you? Well apparently you might not be as safe as you thought.

The owner of a CTM has exclusive rights in respect of that CTM (including the right to prevent use). These rights are enforceable against all 'third parties', which according to the Advocate General includes the owner of a later registered CTM.

This opinion is inconsistent with the rules for UK registered trade marks, which provide that a registered trade mark is not infringed by the use of another registered trade mark. If, however, the ECJ follows the Advocate General's opinion you will struggle in future to rely on the UK rule.

The lesson from this? Pre-application availability searches are key. Priority rules.

ICO sets the records straight - businesses can be fined for not keeping theirs in order

Monetary penalties from the ICO in relation to breaches of the Data Protection Act 1998 (“DPA”) have become associated with organisations losing significant amounts of personal data, sometimes in more obscure ways such as a disposal in a supermarket car park recycling bin. Yesterday the ICO announced that it had served its first monetary penalty which did not relate to a data loss. Prudential was served with a monetary penalty of £50,000 for mistakenly merging records of two customers who shared the same first name, surname and date of birth. In addition, Prudential failed to rectify its mistake despite being contacted on several occasions.

This decision should serve as a reminder that businesses should ensure that any personal data held, be it of employees or customers, is accurate and up-to-date (in order to comply with Principle 4 of the DPA) and that they ensure appropriate follow-up action is taken upon receipt of notifications by customers which state that details held about them are incorrect.

“Excessive” software patent protection – only in the USA?

Following the recent punch-up between Apple and Samsung in the US courts, a leading American judge has argued that patent protection in the USA may be excessive.

In a recent post on his blog US Court of Appeals judge Richard Posner, argued that when patents provides more protection from competition than is needed to provide an adequate incentive to invent, this inflates market prices, increases the cost of patent clearance searches, engenders wasteful patent races (encouraging defensive filings) and encourages patent “trolls” (who acquire patents simply to extract licensee fees under threat of infringement litigation).

He illustrated what he considers to be the problem of excessive patent protection with what is happening in the software industry, noting that the incremental, piecemeal and ephemeral nature of software innovation, with each component arguably being patentable, results in “huge patent thickets, creating rich opportunities for trying to hamstring competitors by suing for infringement”.

He concluded that major reforms are necessary in the USA.

Does the software industry in the UK and elsewhere Europe face a similar minefield? While it is more straightforward to obtain a patent for software in the USA, it is a lot easier to obtain a software patent in the UK or Europe than one might think.

The UK approach to assessing the patentability of computer-implemented inventions is now set out in two Court of Appeal judgments. The first of these concerned the combined appeals in Aerotel Ltd v Telco Holdings Ltd and Macrossan. The second is the Court of Appeal's judgment in Symbian Limited v Comptroller General of Patents.

So, the warning sounded Judge Posner in the US is applicable here also. Be careful out there!

Notification process for data controllers - ICO consultation

The current notification system for data controllers and the look of the register may be set to change in the new year. The Information Commissioner's Office has launched a consultation for the public and data controllers to obtain their views on how the notification process can be made easier and the register more user friendly. The consultation closes at 5pm on 30 November and the consultation documents can be found on the ICO website here. The ICO will then aim to publish a summary of the responses and the ICO's reaction to them by the end of January 2013.