Mills & Reeve: Technology Law Update

Employment law reform in 2013

In our review of the year, we’ve put together our predictions for 2013, as well as our necessarily subjective selection of what has been most significant in 2012 on the employment front. Life being what it is, it is already looking a bit dated thanks to a fresh wave of Government announcements 10 days ago (see our posting here for a quick overview of some of them).

Most of the measures in the pipeline reflect yet another attempt by the Government to tackle the perceived threat of a growing litigation culture. So in the course of 2013 we expect to see the introduction of fees in the employment tribunal, new tribunal rules, and compulsory pre-issue conciliation, all with the aim of cutting down disputes. Also in the same vein are measures to increase the use of compromise agreements (to be re-named settlement agreements), bolstering the confidentiality of pre-dismissal negotiations and introducing an earnings-related cap on unfair dismissal compensation.

Standing out from the main group of measures addressing dispute resolution, is an ambitious but controversial plan to create a completely new type of employment status: the employee-owner. This has been billed as of potential benefit to high-tech and start-up businesses. Critics of the plan have pointed out that the cost of setting up such complex arrangements, and the risk of disputes about share valuation and exit arrangements, may well outweigh the benefit to employers of being able to contract out of unfair dismissal and redundancy protection.

Are you British enough to pay less tax? New tax reliefs to be introduced for British video games and television programmes

On 11 December 2012, HM Revenue & Customs (“HMRC”) and HM Treasury published draft legislation for new tax reliefs for high-end television and animation programmes, and video game development. It is intended that these reliefs will be introduced in Finance Act 2013, and they will be available for certain television and video game production companies that produce sufficiently “British” programmes and video games.

As with many tax reliefs, the detailed provisions are complex (and differ slightly as between video games and television programmes) but the basic conditions are:

Video games:

• “video game” is not defined (so is expected to take its ordinary meaning), but it specifically does not include:
  • anything produced for advertising or promotional purposes (though some minor in-game product placement may be acceptable); or
  • anything produced for gambling purposes.

Television programmes:

• must be a drama, documentary or animation;
• must not be within an excluded category of programme (eg, advertising, news/current affairs, quiz or panel show etc.); and
• in the case of programmes which are not animations:
  • must be commissioned to fill a time slot of over 30 minutes; and
  • average “core expenditure” on the programme must be at least £1 million per hour.

In each case, the video game or television programme must be intended for broadcast or supply to the general public, must be “culturally British” (and certified as such), and at least 25 per cent of the core expenditure relating to the video game or programme must be UK expenditure. The “British” test is interesting, not least because it really refers to Europe. HMRC has published draft Regulations setting out the various conditions (essentially, the test is a points system, with relief available if the video game or programme achieves sufficient points). The tests are slightly different for programmes, animations and video games – but a selection of the tests for video games will give a flavour of the requirements:

• the percentage of the video game set in the UK (or EEA);
• the number of UK (or EEA) characters in the game;
• whether the video game story is British (or relates to an EEA state);
• percentage of original dialogue recorded in English (or a “recognised regional or minority language”);
• the video game’s level of contribution to British culture;
• at least 50 per cent of certain types of work being carried out in the UK; and
• whether certain key personnel (project leader, scriptwriter, lead programmer, 50 per cent of the development team etc) are citizens of, or ordinarily resident in, Britain or an EEA state.

The new reliefs are to be welcomed – but does this mean that Lara Croft's future adventures will now be confined to these shores for tax reasons?

Patently copyright is not a patent – types of IP in the UK

A sentence on the BBC news website in an article about patent applications for graphene (which has since been amended) stood out yesterday morning; it stated that there has been “a sharp rise in patents filed to claim copyright over different aspects of graphene”. We couldn’t comment about the other jurisdictions mentioned in the article, but in the UK, copyright and patents are different types of IP and it is not possible to patent copyright in itself and claiming copyright is different to patenting an invention. In view of this, the Technology Law Update team thought it would be helpful for businesses to have a brief summary of the four main types of IP protection available in the UK, copyright, trade marks, designs and patents.

Copyright

Copyright is an intellectual property right which arises automatically in original work which has been recorded in one form or another, such as on film or in writing. Certain uses of works in which copyright subsist without the author’s consent are prohibited and the author has a right to take legal action for infringement of their rights. It is not a right which can be registered in the UK so businesses should ensure there is sufficient contemporary evidence of the creation of copyright in order to prove ownership and assist protection.

Trade Marks

Trade marks are the signs used by businesses to distinguish their goods or services from those of other businesses and to build up a brand which the consumer will associate with that business. They are unique marks which can consist of words, names, designs, symbols, numbers, letters or even the shape of the products. Although unregistered trade marks will offer a degree of protection under the common law of passing off, trade marks can be registered and thus benefit from greater protection.

Designs

IP rights in original designs arise when the design is recorded in a design document or an article has been made using the design. Due to the nature of designs, they may also be protected by copyright as well as design rights. In some circumstances it will also be possible to register a design.

Patents

Patents are granted for new inventions which show an inventive step and which are capable of industrial application and have passed a vigorous examination process. Once registered, a patent will give the owner the exclusive right to exploit the invention to the extent covered by the patent and it will protect the owner against any unauthorised implementation of the invention for the duration of the patent. Patents can therefore be incredibly valuable assets which allow the owners to licence the use of the invention for royalties, license fees or to sell the patent if they do not wish to exploit it themselves.

The above is only a summary of the various rights, and appropriate legal advice should be sought for further advice on the protection and exploitation of intellectual property.

Happy New Year data processors!

It looks like Europe’s Article 29 Working Party on data protection’s New Year’s resolution was to be helpful to data processors, as it has decided to launch Binding Corporate Rules (“BCRs”) for data processors from 1 January 2013. Previously, using BCRs to manage cross-border personal data flows was only an option for data controllers. 

As a reminder, BCRs are a set of rules which an entity can voluntarily put in place between members of its corporate group, wherever they are located. The rules need to be blessed by the Information Commissioner, but once that has been achieved they provide some valuable benefits, including:

1. they allow personal data to be transferred freely intra-group; and
2. the whole corporate group is considered “adequate” under European data protection law meaning each member is able to receive personal data from others - so safeguards do not have to be assessed each time data is going to be transferred by a processor outside of the EEA and other adequate jurisdictions.

Data controllers (any entity which processes personal data relating to, say, its own employees) have been able to benefit from BCRs for some time but now data processors, like multinational outsourcing companies and cloud service providers which process personal data (e.g. payroll, or medical data) as part of their external business operations (i.e. the services they offer to customers), will be able to take advantage. So an outsourcer based in the EEA could collect personal data from a customer located in the EEA, and then transfer that data to a subsidiary in India, under cover of the group BCR’s. Obviously many outsourcers and cloud service providers use this business model now, but data protection compliance is an ongoing task signing up to the approved model clauses with each new customer.

Putting BCR’s in place and obtaining ICO approval is not a particularly quick or easy procedure, but it is a one off – apart from some required notifications. This new development offers an interesting opportunity for organisations which process significant amounts of customer personal data, to potentially cut costs, reduce compliance risks, and perhaps find a new selling point as an ICO-approved cross-border data protection compliant service provider. Obviously someone in marketing might want to come up with a catchier strap line.