Technology Update – What Every Business Needs to Know

New technology laws for business and more in the Moore Blatch updateOver the next couple of years, important new legislation about data privacy will be coming through from the EU: any business that stores customer information, needs to be aware and can start preparing now. Read more here

Other news in the latest update from Moore Blatch:

 

 

Think Twice Before You Copy From Another Website (it could prove to be expensive!)

In a recent case, a home improvement company in Bradford lifted 21 images from the website of a loft conversion company in the London area when it decided to move into loft conversion work and wanted some illustrations.

Absolute Lofts South West London Ltd. sued the Bradford company, Artisan, and its owner, Mr Lubbock, and won substantial damages. Artisan admitted liability and the judge awarded a total of £6300 in damages – £300 for ‘compensatory damages’ and a further £6000 – 20 times the basic compensation– because of the flagrant nature of the breach.

imitate photo

Making duplicates of other people’s images could leave you exposed
Photo by iloveart106 Creative Commons

In a case like this, compensatory damages are calculated on a theoretical basis of what might have been agreed for the use of the images between two willing parties. Experts instructed by each of the parties came up with different figures – the expert for Absolute Lofts argued that Artisan would have paid £9000 for a professional photographer to take those pictures. Artisan reckoned the figure was less than £1000. The judge did not think much of either expert opinion and decided £300 was the right amount as this was what it would have cost to source similar images from a photographic library.

However, the judge then decided that additional damages were due. Section 97 (2) of the Copyright Designs & Patent Act 1988 allows additional damages when there is a flagrant infringement of copyright.  And Article 13(2) of the EU Directive on The Enforcement of Intellectual Property Rights allows for damages appropriate to the prejudice suffered by the injured party.

Artisan’s owner knew that the images were being used without consent. But the judge also found that Artisan had directly profited from the photographs on their website – it seems that they not only implied the company had expertise in loft conversions, but its profits increased as a result.   Even though the distance between the two companies did not mean that Absolute Lofts suffered from direct loss of business as a result of Artisan’s action, the judge nonetheless thought there was prejudice and so awarded the £6000 additional damages.

The internet is often seen as a free resource where you can pick up and copy other people’s pictures or text and use them on another website. This case underlines the fact that you do so at your peril, and do remember that it is relatively easy for a copyright owner to search for and find duplication on the web.

There are plenty of free images available online, and Google search now allows you to search by license. There is a system of Creative Commons licensing that allows image publishers to declare the details of how they want their images shared.  Because of this, the courts are likely to get increasingly firm on blatant infringements.

So, if you are engaging a designer, be sure to check that their contract makes it clear that nothing they supply will infringe any third party’s copyright. Our designers’ contract template covers this along with all the other things you need to consider when working with designers.

For the full case report see: http://www.bailii.org/ew/cases/EWHC/IPEC/2015/2608.html

 

Data Protection: Safe Harbor Not Safe Any More

 

servers photo

Who in the world is handling your data? Maybe Joshua Crass in Oregon has it on this Facebook Data Center Server Board. Photo by IntelFreePress on Flickr

You may not think that much about where all the personal information you share on Facebook is physically stored, but because each country has different rules about the data stored within their territory, this global data sharing is presenting a complex challenge for anyone involved in personal data collection and storage.

The rules in the EU are different from those in the US, yet millions of Europeans are sharing their data with companies whose computers are located in America, and thus who are subject to different rules on who can access that data.

Safe Harbor

The EU places strict limitations on transferring data overseas and up till now, an arrangement called Safe Harbor has been used to allow US companies to store a European citizen’s data without having to have individual case-by-case agreements with all parties. The Safe Harbor scheme is a set of principles and rules for processing personal data.

US organisations wishing to transfer personal data from the EU to the US may subscribe to the scheme voluntarily with the US Department of Commerce. An agreement was reached between the US and the European Commission in 2000 that US companies that subscribed to Safe Harbor would be considered to be operating within the requirements of the European legislation requirements.

However, following Edward Snowden’s revelations of the levels of interference with personal data by American security agencies, it has become apparent that data protection in the States is incompatible with EU data protection laws.

A certain Mr Max Schrems of Austria brought a challenge to Facebook in Ireland through the European courts. Does Facebook, which stores a lot of data in the States, ensure that a European’s data is looked after correctly according to EU regulations?

As a result of this case, the European Court of Justice has declared that this Safe Harbor agreement is invalid for failure to comply with Article 25(6) of the Data Protection Directive. Safe Harbor no longer provides sufficient protection to European citizens when their personal data is transferred to the USA.

So the 4500+ companies that are relying upon it to cover the transfer of information from Europe to the US will have to put in place alternative mechanisms.

Facebook must also be investigated further by the Irish Data Protection Commissioner (DPC). If the DPC decides that Facebook’s activities have not provided adequate protection for European Facebook users, then it may suspend transfers of personal data to American servers with immediate effect.

Are many businesses affected?

The ruling is far wider than just Facebook and other tech giants. There is as yet no allegation that Facebook has done anything wrong but as Safe Harbor has been ruled invalid then thousands of businesses have significant work to do!

As stated, some 4,500 US companies are currently signed up to Safe Harbor. They will now have to put in place alternative means of ensuring that they comply with the European data protection legislation.

But many other companies also send data about their employees and their customers to the US. Companies with a US parent often use IT systems located at the US headquarters to administer personal data such as HR and CRM.

Likewise, significant numbers of companies outsourcing their IT systems to cloud service providers which frequently use US-based servers to store the data. Even companies that, for example, send payroll data to the US for administrative purposes will be caught by the collapse of Safe Harbour.

What will we do instead?

For businesses operating in Europe and the USA, the significance of this decision should not be under-estimated. Transfers of personal data from Europe to the USA made solely on the basis of the protection afforded by the Safe Harbor Agreement are no longer compliant with data protection law, so clearly any organisations that have been relying on Safe Harbor will now have to find another way to comply with their data protection obligations.

The most common response will be to sign up to model contract clauses. However, this will cause an administrative burden. Particularly as the collapse of Safe Harbour has the following effects:

  • Individual European countries can set their own regulation for US companies’ handling of their nationals’ data. This means that US companies may have to comply with different regulations for each European country. This will mean numerous different contractual requirements;
  • Countries can choose to suspend the transfer of data to the US — forcing companies to host user data exclusively within the country. Russia has recently introduced this requirement and others may follow suit.
So, if affected, your buisiness needs to consider:
  • Can the transfer of data be suspended? Can you move all your data storage to the country in which you operate?
  • Where transfers of data to the USA are still necessary, consider putting in place model data protection contractual clauses in respect of those transfers
  • or set up corporate rules in respect of intra-group transfers of data.

 

Employment Law Update October 2015

Latest update from Moore Blatch on employment law in the UK

Latest update from Moore Blatch on employment law in the UK

The latest missive from Moore Blatch covers:

Read the employment update in full here

Consumer Rights Act – Unfair Contract Terms

The Consumer Rights Act 2015 introduces new rights for consumers and our previous articles have dealt with how the Act affects sale of goods, services and digital products.

Kawarau Bridge - Bungee dipping photo

You can’t escape your responsibilities by writing them away in a contract

The Act also re-states and expands the existing law concerning unfair terms in consumer contracts.

The basic requirements are that contract terms must be fair.

The law says that a term is unfair if “contrary to the requirements of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.

This fairness test applies not only to terms in the contract but also to consumer notices – e.g. notices in car parks, as well as notices appearing online on a website.

All written terms in a consumer contract or in a consumer notice must be transparent – i.e. expressed in plain and intelligible language.

Any term in a consumer contract or a consumer notice attempting to limit or exclude the trader’s liability for death or personal injury resulting from negligence is unlawful and not enforceable. (So a bungee jumping company can’t get you to sign away your rights – if the bungee fails, that will still be their fault.)

Similarly any term attempting to limit or exclude the various terms implied by the Act (satisfactory quality etc.) are unfair and unenforceable.

What Is ‘Unfair’?

Schedule 2 of the Act contains 20 examples of terms that may be regarded as unfair. These include:

  • Disproportionately high charges when a consumer decides not to carry on with a contract or with services which have not been supplied
  • Terms that allow the trader to decide the subject matter after the consumer is bound by the contract
  • A term allowing the trader to fix the price after the consumer is already bound by the contract
  • A term designed to limit the trader’s liability in the event of death or personal injury of the consumer that results from some act or omission of the trader
  • A term designed to exclude or limit the consumer’s rights if the trader does not perform his obligations adequately
  • A term that allows the trader to bring the contract to an end without reasonable notice unless there are serious grounds for doing so
  • A term which has the effect of binding the consumer to terms which he has had no real opportunity of becoming acquainted with before the conclusion of the contract.

Fairness Exemption

the fairness test in consumer rights

Notices to the public such as clamping warnings are also subject to the ‘fairness test’

The test of fairness will not apply to a term in a contract that specifies the subject matter of the contract, nor will the price be subjected to a fairness test. But for the exemption to apply, the subject matter and the price must be prominent and transparent – i.e. in plain English and intelligible.

What You Need To Do

All businesses need to review their contract terms at this stage to see that they do not fall foul of the Consumer Rights Act and the updated Unfair Terms requirements incorporated in it. Although much of the existing legislation is retained, there are new provisions as well.

Resources

Employment Law Update August 2015

Newsletter from Moore Blatch employment lawyers

PDF newsletter from Moore Blatch employment lawyers

The latest from Moore Blatch includes:

  • The government’s Trade Union Bill, set to make it harder to start strike action
  • Justice Committee inquiry into legal fees and access to justice
  • Consultation open on the Gender Pay Gap
  • Key announcements from the last Budget
  • New Acas guides for employers

Read the briefing in full at Moore Blatch 

 

Consumer Rights Act: Digital Products

Digital products are now a fact of life, and new legislation is catching up

Digital products are now a fact of life, and new legislation is catching up

The new Consumer Rights law coming into force on 1st October 2015 is significant: it introduces new rights for consumers as well as consolidating a lot of existing legislation, and it applies to almost all contracts between traders and consumers. And for the first time, digital products are included specifically in the law.

These new provisions will affect everything from smartphone apps to streamed songs, movies, e-books, games, and business products such as design templates and even our own editable ready-made contracts.

Definitions

A ‘consumer’ is an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

A ‘trader’ is a person acting for purposes relating to that person’s trade, business, craft or profession and it includes public sector authorities and government departments.

Digital Content – A New Type of Product

This is the first legislation to establish standards for the supply of digital content which is defined as: “data which are produced and supplied in digital form”. (A somewhat circuitous definition, with questionable use of the word ‘data’ as a plural noun).

The law applies whether the digital content is paid for or is supplied free of charge with other goods and services which are paid for by the consumer.

Every contract for supply of digital content will now be treated as including a term that the digital content:

  • is of satisfactory quality,
  • matches its description and
  • matches any trial version that has been supplied and
  • complies with other information supplied by the trader – e,g. with regard to main characteristics, functionality and compatibility and
  • the trader has the right to supply it.

“Satisfactory quality” is the standard that a reasonable person would consider satisfactory taking account of the description, price and ‘all other relevant circumstances’ (which include any advert, labelling or public statement made by the trader, his representatives or the original producer of the digital content). The quality includes:

  • its state and condition
  • fitness for the purposes for which that kind of digital content is usually supplied
  • freedom from minor defects
  • safety
  • durability

If, before the contract is made, a consumer makes known to the trader a particular purpose for which the digital content is required, then it has to be fit for that purpose even if it is not usually supplied for that reason.

If the trader has the right to modify the digital content, then the satisfactory quality and other standards mentioned above apply also to the modifications.

Traders are required to provide a lot of pre-contract information to consumers – including price, payment, delivery, performance etc. under The Consumer Contracts (Information etc.) Regulations. All that information is now treated as a term of the contract. (See our previous article on those regulations)

Remedies where Digital Content does not Comply with these Terms

If digital content does not meet these standards, a consumer has a number of potential remedies:

  • Repair or replacement (unless this is not possible or is disproportionate compared to other remedies
  • A price reduction if (a) the trader has been asked for repair or replacement and failed to comply or (b) repair or replacement is not possible or is disproportionate. The reduction could amount to a full refund where appropriate.
  • A refund if the trader did not have the right to supply the digital content
  • A right to recover costs (up to the purchase price) incurred by the consumer as a result of the trader failing to supply all the pre-contract information required by the law
  • If the digital content causes damage to a device of the consumer or to other digital content of the consumer, the trader either has to repair the damage or pay compensation

These remedies do not prevent a consumer from claiming damages or some other remedy in court such as an order for specific performance of the contract. But recovering twice for the same loss is not allowed.

Links

  • The Consumer Rights Act can be found here.

ContractStore offers ready-made contract terms for digital products here:

 

 

Consumer Rights Act: Services

Whatever service you are providing, you will need to meet basic standards

Whatever service you are providing, you will need to meet basic standards

The new Consumer Rights law coming into force on 1st October 2015 is significant: it introduces new rights for consumers as well as consolidating a lot of existing legislation, and it applies to almost all all businesses in the UK that supply goods, services or digital products to consumers.

Definitions

A ‘consumer’ is an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

A ‘trader’ is a person acting for purposes relating to that person’s trade, business, craft or profession and it includes public sector authorities and government departments.

Services

Every contract for services includes a term, implied by law,  that:

  • the trader will exercise reasonable skill and care in providing the service
  • any information* given to the consumer about the service is included as a term in the contract if it is taken into account by the consumer when deciding to enter into the contract (unless the trader qualified he information at the time)

Where no price is specified in a contract, a term is implied that the consumer will pay a reasonable price for the service.

Where no time for performing the service is specified in the contract, the trader must perform the service within a reasonable time.

*Consumer Regulations that came into force in 2014 specify the information that a trader has to give to a consumer when entering into a contract- there are 24 separate items  and these were mentioned in the blog post we wrote at the time.

None of these implied terms can be excluded in the contract.

Remedies for a consumer where the trader is in breach of any of these implied terms may comprise:

  • repeat performance by the trader
  • a price reduction (which in some circumstances can mean a full refund)

So, if a trader has a clause in his contract limiting his liability to 10% of the contract price, that is illegal and will not be binding on the consumer.

These statutory remedies do not prevent a consumer claiming damages or seeking some other order such as specific performance but the law says the consumer cannot recover twice for the same loss.

The Consumer Rights Act can be found here.

Consumer Rights Act: Goods

Goods trade is subject to new legislation in the UK coming into force on 1 October 2015

New rights for consumers in the UK will apply from 1 October 2015

The new Consumer Rights law coming into force on 1st October 2015 is significant: it introduces new rights for consumers as well as consolidating a lot of existing legislation, and it applies to almost all contracts between traders and consumers.

Definitions

A ‘consumer’ is an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

A ‘trader’ is a person acting for purposes relating to that person’s trade, business, craft or profession and it includes public sector authorities and government departments.

‘Goods’ are ‘tangible moveable items’  – in other words, things you can handle – so they do not include software or buildings.

Selling Goods – What the Law Says

It is a legal requirement that all goods sold to a consumer are:

  • of satisfactory quality
  • match their description
  • match any sample that has been supplied
  • match any model which has been seen by the consumer (unless differences have been pointed out)

“Satisfactory quality” is the standard that a reasonable person would consider satisfactory taking account of the description, price and other relevant circumstances. The quality includes:

  • fitness for the purposes for which those goods are usually supplied
  • appearance and finish
  • freedom from minor defects
  • Safety
  • Durability

If the sale includes installation by the trader and the goods are installed incorrectly, then they do not conform to the contract.

If, before the contract is made, a consumer specifies a particular purpose for which the goods are required, then they have to be fit for that purpose even if they’re not usually supplied for that reason.

Traders are required to provide a lot of pre-contract information to consumers – including price, payment, delivery, performance etc. under The Consumer Contracts (Information etc.) Regulations. All that of information is now treated as a term of the contract. (See our previous guidance article on those regulations)

Remedies for Defective Goods

If goods do not meet these standards, a consumer has a number of potential remedies:

  • Within 30 days from delivery (or installation if this is included), reject the substandard goods and claim a full refund
  • after the 30 days the consumer can require the repair or replacement of defective goods
  • if the trader does not replace or repair defective goods at all or does so but the goods are still defective, the consumer can require either a price reduction or a final right to reject the non-conforming goods and get a refund.

Consumers should normally raise any claim within six months from delivery.

A refund must be made within 14 days of the trader agreeing that a refund is due and no fee for arranging the refund is allowed.

Whether or not the contract requires the consumer to return rejected goods, the reasonable costs of return must be borne by the trader. But there is an exception if the consumer returns them from a different place than that where they were delivered. So, for example, if a trader in London supplies goods to a consumer in Brighton and the consumer then moves to Paris, the trader only has to pay the cost of return from Brighton, not the cost from Paris.

If a consumer rejects goods more than six months after delivery, the trader is allowed to deduct from the refund an amount to take account of the time the consumer had use of the goods. (But no deduction is allowed if the goods are a motor vehicle)

The remedies do not prevent the right of a consumer to claim damages or seek some other remedy in the courts. However, the law does say that the consumer cannot make a double recovery for the same loss.

Delivery of Goods

The law (Section 28) requires a trader to deliver goods within 30 days unless another period is agreed. If delivery is not within this period the consumer can treat the contract as at an end if the consumer made it clear that delivery within that period was essential. Otherwise the consumer can demand delivery within ‘an appropriate’ period and if the trader does not meet this, the consumer can cancel.

Risk

Risk of loss or damage passes to the consumer when the goods come into his possession or they are delivered to a carrier commissioned by the consumer.

Your Terms

Using a good standard set of terms and conditions, and getting legal advice if there is anything aren’t sure about, is always good practice regardless of changes in the law. ContractStore have a range of ready made T&Cs and other documents for selling goods that are specifically designed for businesses trading goods. For example:

 

Is Your Business Ready for the new Consumer Rights Act?

The new Consumer Rights Act will come into force in October 2015

The new Consumer Rights Act will come into force in October 2015

This new law is significant: it introduces new rights for consumers as well as consolidating a lot of existing legislation, and it applies to almost all contracts between traders and consumers.

It comes into force on 1st October 2015 and affects all traders that supply goods, services or digital products to consumers.

Definitions

A ‘consumer’ is an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.

A ‘trader’ is a person acting for purposes relating to that person’s trade, business, craft or profession and it includes public sector authorities and government departments.

Digital Products are Now Included

The law deals separately with sale of Goods, Services and (for the first time) Digital Products – what standards have to be met, what information provided, and the rights of a consumer to cancel or get compensation if the trader is not complying with the law. (This will of course affect ContractStore so we are paying especially close attention!)

It also covers Unfair Terms in contracts.

More Guidance

Over the coming month we will be publishing guidance for businesses who trade in Goods, Services, and Digital Products. You can follow this blog or sign up for our enewsletter below, to get the updates.

Get updates by email:


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