Mills & Reeve: Technology Law Update

Foxed Fox: Tough copyright remedy confirmed extinct.

Copyright infringers always have to fear the criminal law.  An even more potent sanction was “conversion” damages.  The copyright owner was entitled to treat the infringing goods as his own, and when the infringer disposed of the infringing goods, to treat ALL the proceeds of sale as belonging to him.

Alas for a Fox; for in Twentieth Century Fox v Harris ([2013] EWHC 159 (Ch)) the UK High Court has confirmed that this remedy no longer exists.  Following  Mr Harris’ defeat in the Newzbin case ([2010] EWHC 608 (Ch)), in which Newzbin were found to have “engaged in a deliberate course of conduct well knowing that the vast majority of the materials in the Movies category … are … likely to be protected by copyright and that the users of Newzbin who download those materials are infringing that copyright”, Mr Harris set up Newzbin2, apparently not having learnt a sufficient lesson the first time.  Fox argued that they were entitled to damages on the basis of infringement of a property right – like (unlawfully) selling the copyright owner’s car: Fox should be entitled to claim all the proceeds of sale (without regard, of course, to any costs Mr Harris had incurred).  Fairly short shrift was given to the argument.  The remedy was abolished by the Copyright Designs and Patents Act 1988 when it no longer provided for conversion damages (section 96).

Copyright owners of course can still rely on an entitlement to damages reflecting the flagrancy of the infringement and in Performing Rights Society Ltd v Burns and another [2012] EWHC 221 (Ch), a fair estimate was assessed at 3 times the charge which would otherwise have been made for use of the copyright work or Beals Mortgage v First Global Financial Services ([2012] EWHC 3761 (QB) para 174, 175) where twice the usual damages was appropriate; or for an account of profits, .  This ought to make it unprofitable for the infringer to carry out the infringement.  Alternatively, they can turn to the criminal law.

Local TV Comes A Few Steps Closer

The roll-out of local television has taken a few steps forward over the last couple of weeks.  On 4 February, Ofcom announced the award of the London local TV licence to ESTV Limited, which will operate under the London Live name.  With a potential audience of up to 4 million homes, the London service will have the largest reach of all local TV services in the UK.  Applications were received by Ofcom to run local TV services in 19 of the 21 areas in which Ofcom invited applications.  15 local TV licences have now been granted, with further awards expected in the coming months.  No applications were received in Swansea or Plymouth and Ofcom will soon be seeking final expressions of interest for those local TV licences.

More significantly, Ofcom finally awarded the local TV multiplex licence for digital terrestrial TV (DTT) on 28 January.  Delays in the multiplex licence award had been causing frustrations for local TV service licence holders keen to push ahead with their broadcast plans.  The multiplex licence was awarded to Comux UK Limited, a company which will be owned by the holders of the local TV service licences and supported by Canis Media.  In addition to the areas in which Ofcom has already started the process of licensing local TV services (including Birmingham, Leeds, London, Manchester and Norwich), Comux has offered to cover a range of other locations (including Bedford, Cambridge, Luton and Stoke) if local TV services licences are awarded in those areas.  Once DTT broadcasting starts later this year, local TV channels will be found at position 8, in England and Northern Ireland, and position 45, in Wales and Scotland, on the Freeview electronic programme guide (EPG).

Finally, Mills & Reeve client Mustard TV, the local TV licence holder in Norwich, launched its online service on 31 January, with a lively mix of news, sport and lifestyle programming.  Other local TV licence holders will be doing the same soon as they continue to build towards the first DTT broadcasts later in 2013.

New PCI DSS Cloud Computing Guidelines

On 7 February, the PCI (Payment Card Industry) Security Standards Council issued the PCI DSS Cloud Computing Guidelines Information Supplement.  The PCI Security Standards Council develops, manages and raises awareness around payment data security though its PCI Data Security Standard (PCI DSS).  PCI DSS compliance is a benchmark for online merchants and payment service providers.  The Cloud Computing Information Supplement sits alongside, and does not replace, PCI DSS.  The guidance will be of use to both cloud service providers and merchants using cloud technologies for the storage and processing of cardholder data.  Using the guidance will help cloud providers and cloud customers to identify and define their respective security responsibilities, a process that is essential in achieving and maintaining PCI DSS compliance.

Volte Facebook: Do website terms and conditions stick?

Facebook/Instagram have apparently learnt the quick way whether their proposed new terms and conditions would be acceptable – see Newsnight (18.12.2012) and NY Times and clarified in the Guardian.  However, their repeated “skirmishes” with the public over terms and conditions highlights a larger concern: the fact that everyone knows, including those running web sites, that the large majority of users do not read terms and conditions before using a web site – even if the web site requires the user to click to agree; still less look at changes in terms.  Is it now time to limit what terms web site owners can enforce without showing that there is a real prospect of those terms being read and understood by the user and willingly accepted? Is “zombie” acceptance by clicking on an unknown quantity really acceptable?  Shoule we even contemplate a Europe wide approach to such terms?

The issue was emphasized in the recent “free" face cream opportunity (Guardian), where users signed up to (expensively paid for) monthly deliveries unless they cancelled within a short time period.  Of course many had not read the small print which told them this would happen.

In a more recent case, Spreadex v Cochrane, in May this year David Donaldson QC (sitting as a deputy judge) rejected Spreadex summary judgment claim for £50,000 incurred on betting on the site.  Spreadex relied on a click to agree term which said that the users would be liable for all (spread betting) trades using their user ID.  Cochrane said that the use resulting in his £50,000 bill was unauthorized – by young son of his girl friend, while the computer had been left on – facts which had to be accepted because this was a summary judgment application.  The judge held primarily that (because Spreadex’ terms committed it to nothing, as it could refuse to accept any trade) there was no contract.  He also decided that, if there had been a contract, the term would have not been enforceable against a consumer under the Unfair Terms in Consumer Contracts Regulations 1999.  One reason, amongst others, was that a user was most unlikely to have read this specific term, let alone understood it amongst the 49 pages of terms and conditions, which was itself only one of 4 documents the user was invited to read – maybe every time they logged on!  In which case Spreadex would presumably never have done any business.

A similar case, but not click-to-agree arose in the USA in 2009: Hine v Overstock.com.  There the decision was also on an interim issue.  The claim was over a much smaller sum, a restocking charge of US$30, but it was brought as a representative action. 

However, should one need to rely on these type of judgments which still leave users (and web site owners) with considerable uncertainty and in many cases are “in the wings” – relying on extreme cases?  Bluntly, is it not time to accept, as most high street shops do, trading on the internet is done on a common set of key contractual conditions?  On can address specific procedural issues for getting the goods or service to the customer, of course.  And if a web site owner wishes to change them they need to show much more positive acceptance (and an expectation of understanding) by the user than mere “acquiescence in ignorance”? 

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.