Archive for February, 2010

ASA ruling in relation to printed adverts issued by online businesses

The Advertising Standards Agency (ASA) has just issued an interesting ruling against online electronics retailer dabs.com.

Like many online retailers, Dabs uses dynamic pricing – in other words, the price of a particular item can vary from day to day (for example, to reflect the price charged by competitors). However, Dabs also issues a traditional promotional printed brochure. Dabs thought that it had addressed the issue of price discrepancies by telling readers of its brochure to check the website for the latest price.

The ASA rejected this wording, holding that the brochure was misleading and a breach of the ASA code. It ruled that any prices quoted in an advert must be correct for the length of time that the advert is in circulation. In the case of a printed brochure, this means that the prices quoted in it would have to be valid on the website for so long as the brochure is being circulated. This would presumably not stop the retailer from offering a lower price, but would prevent the retailer from raising its prices above those advertised in the brochure for so long as that brochure is valid.

This ruling is relevant to all businesses that operate dynamic pricing (not just online retailers), and will require them to consider how they advertise or promote their business and prices – whether that is through printed brochures, or otherwise.

Erase and rewind – some tips on the safe destruction of data

How do you ensure that redundant hardware is scrubbed of sensitive or personal data?

As the data controller, it will be your responsibility (under the Data Protection Act) to ensure that the data is securely destroyed – even if the kit on which it is stored belongs to a contractor. If data is not properly destroyed, then there is a risk that it could be used to help perpetrate fraud or identity theft, or allow competitors to access your confidential information.

We’ve all read stories about hard drives full of confidential information ending up on eBay. As the volume of data held on servers increases, the more important it is to ensure that the data in question is destroyed when the kit or media upon which it is stored is no longer required.

However, there are two competing industries. On the one hand, plenty of legitimate businesses specialise in recovering apparently lost, corrupt or deleted data – whether it is for the purpose of forensic investigations or for disaster recovery purposes. On the other hand, another sector is trying to help people permanently destroy that data. The techniques used by the data recovery experts show that erasing (or even erasing and re-writing) is not sufficient to stop that data being recovered.

Here are some things to consider:

  • Firstly, develop and adopt (and follow) a policy setting out your organisation’s requirements in respect of the destruction of data. This is likely to involve adopting relevant British and international standards and certifications.
  • The safest thing (in terms of data security, if not avoiding trips to A&E) to do is to remove all drives from your hardware before you dispose of that hardware (replacement drives are cheap). But then what do you do? You could shred the drive (making sure that it is destroyed such that it cannot be reconstituted) or have it degaussed. For CDs and DVDs, as any student will tell you, it is fairly easy to melt them into oblivion.
  • If you do not wish to remove a drive from the hardware before disposal or do not wish to destroy it (or any other magnetic media), you could adopt a recognised erase/re-write standard – for example, the US Department of Defense standard.
  • If you are dealing with a contractor, you should ensure that your contract specifies what the contractor should (and should not!) do. Consider whether the contractor should be responsible for disposal or destruction of media and drives, or whether these should be done under your control.
  • Finally, ensure that your contract with your contractor includes appropriate provisions dealing with liability for a failure to follow those procedures, and rights to terminate the contract.

New Brodies’ Planning Blog

In a shameless attempt to copy us the Brodies’ Planning Team has launched its own blog.

If planning law is your thing you can find it here http://planningblog.brodies.com/.

As with our blog you can subscribe for RSS Feeds, Email updates and all that clever web2.0 stuff.

The content should be good – Brodies’ planning team is top ranked in Scotland. To quote the Chambers’ guide to law firms: “This planning practice is indisputably one of the best in the country, with a dedicated core of six planning partners.”

Data security – what you need to know

Upcoming changes to the law mean that keeping information secure is a subject that has to be taken more seriously than ever before.

From 6 April 2010, the Information Commissioner’s Office (“ICO”) will have a statutory power to impose a financial penalty of up to £500,000 on any organisation which has committed a deliberate or reckless breach of any of the principles in the Data Protection Act 1998 (“DPA”), which would cover failing to take appropriate data security measures, where that breach is of a kind likely to cause substantial damage and/or substantial distress.

The Government is also consulting on whether to make an order under the Criminal Justice and Immigration Act 2008 which would introduce custodial sentences of up to two years for those guilty of offences under Section 55 of the DPA. Section 55 offences are committed through the deliberate or reckless misuse of personal information, such as that where a member of staff accesses customer information and sells it or discloses it for unauthorised purposes.

These changes are a response to the ways in which technology has transformed the use of data to deliver goods and services. The data held by companies is rapidly increasing, in volume and value. The risks attached to data security breaches are becoming ever greater, with the bar set to rise dramatically in April. Vigilant implementation of an effective data security policy is therefore vital for any organisation and management who fail to act accordingly are leaving themselves potentially exposed.

We are co-hosting a free seminar on information security along with  Trustmarque Solutions at the Radisson Blu Hotel in Edinburgh on 24th February.  Trustmarque Solutions is one of the largest software licensing companies in the UK and an acknowledged specialist in all facets of software management. Trustmarque and Brodies have organised this seminar to raise awareness of data security issues, from both a legal and a practical perspective.

At the seminar Brodies will discuss the essential elements of an effective data security policy and Trustmarque will make you aware of technology and management processes which will help you to implement your policy successfully.

There are still some places left for the event. If you are interested in attending, please contact me at john.mcgonagle@brodies.com or my colleague Emma Lawson on emma.lawson@brodies.com.

Audi you like that?

And so to a recent case where a new car appeared be showing more “kaputt durch technik”, rather than the advertised Vorchsprung durch Technik.

The case considers the period of time within which a buyer will be deemed to have accepted goods for the purposes of the the Sale of Goods Act 1979 (SGA). Whilst the case considered the point for the purposes of a buyer’s right to reject goods under section 15B (which applies only in Scotland), the case is of general relevance to the effect of acceptance under the SGA – in particular, the rights and remedies of a buyer in respect of the supply of defective goods.

The pursuer had purchased, as a “third car”, a £41,000 Audi A4 from Edinburgh Audi. Following a year of occasional use, a number of minor and then major problems occurred, the latter of which caused the car to suddenly run in “safety” mode (restricted to no more than 30 mph). When this happened for a second time, the pursuer took the car back to the dealer (now 15 months after delivery), where it remained for several months whilst the dealer tried to repair it. After a number of failed attempts to repair it, the pursuer sought to reject the car and seek repayment of the purchase price, failing which payment of damages.

The court held that the car was not of satisfactory quality (and therefore in breach of the SGA) as it had been fitted with a defective electronics component. However, the court also held that the pursuer had lost his right to reject the car. Under the SGA, if the buyer retains the goods for “a reasonable period of time” without intimating to the seller that he has rejected them then they wil be deemed to have been accepted.

There are a number of points to take from this case, which are relevant when considering whether a buyer still has a right to reject defective goods:

  • the right to reject is a short term remedy only, and the “reasonable period” for the purposes of deemed acceptance will be construed accordingly
  • this applies even where there is a defect that does not emerge until some time after delivery, as the the buyer still has a remedy in damages
  • however, any period during which the seller attempts to repair the goods is discounted for the purposes of calculating the “reasonable period”
  • in this case, after 15 months it was too late for the pursuer to reject the car
  • buyers wishing to preserve their right to reject goods should therefore notify the seller as soon as they become aware of any defects or problems
  • notwithstanding this case, consumers may still have remedies (to rescind contracts or require replacement of goods) under the European law derived rights contained in later sections of the SGA

Pizza protection!

I thought I’d cook up a little blog post about the EC’s recent decision to grant special legal protection to Neopalitan pizzas. Pursuant to Council Regulation (EC) No 509/2006 on “agricultural products and foodstuffs as traditional specialities guaranteed”, the EU’s quality food board has granted the Neopalitan pizza coveted Traditional Specialty Guaranteed (TSG) status.

A TSG is a trade mark granted by the EU to protect agricultural products or foodstuffs which have certain features setting them clearly apart from other similar products belonging to the same category. TSG foodstuffs must be manufactured using traditional ingredients or production processes. 

TSG is not to be confused with similar-sounding EU “indications of geographical origin”. To receive TSG status a product doesn’t have to be manufactured in a specific geographically delimited area. This sets the TSG protection apart from the PDO (“Protected Designation of Origin”) and PGI (“Protected Geographical Indication”), separate protections arising where a product is traditionally and at least partly manufactured within a specific region.

You can chew over the distinctions by conjugating and deliberating the following local examples in a Masterchef style.  Orkney Beef is protected by PDO; Scotch Lamb, Arbroath Smokies and Scottish Farmed Salmon are protected by PGI; and across the border English food manufacturers have left no doubt as to the traditional nature of their fare by claiming TSG status for “Traditional Bramley Apple Fie Filling” and “Traditional Farmfresh Turkey”.  (The applications for “Really Traditional We’ve Been Making It For Years Deep Fried Mars Bar” and “Come On Big Man, Of Course It’s Traditional Macaroni Pie” are surely imminent.)

Returning to Neopalitan pizza, the practical upshot of all of this is that only pizza made according to the Neapolitan tradition can now be called “Neapolitan Pizza”. Theoretically, pizza restaurants and pizza manufacturers across the globe will have to conform to a strict list of ingredients and a specific method of cooking if they want to label their pizza “Neopolitan”. If they don’t then they could be subject to a fine (to a maximum of 35,000 Euros), or even imprisonment.

According to the original application by the Naples pizzaiolo (pizza-maker) association, to make a pizza in the traditional Neopolitan way you must use durum wheat flour, sea salt, fresh yeast, genuine mozzarella cheese from the milk of buffaloes (rather than cows) and San Marzano tomatoes (from Mount Vesuvius). There’s also various requirements as to size and diameter.

You may find the existence of this Traditional Specialty Guaranteed protection rather surprising, and perhaps even a little ridiculous. Personally I admire how the people of Naples are proudly defending their creation, and I’m sure it had absolutely nothing to do with trying to make some cash.  I do however wonder how rigorously the legal protection can actually be enforced. 

While I hope everybody gets a slice of the pie, I wish them luck, because they’re going to knead it. 

I’m now starving – vending machine here I come!

Sky v. EDS – Follow Up – Interim Damages Award

As a follow up to the blog on Sky v. EDS a few days ago I read that the judge has given Sky interim damages of £200m. Ouch!

Typically an interim award is quite a bit less than the final award. Ouch!

EDS has 14 days to cough up. Ouch!

Of course EDS is seeking leave to appeal the judgement.

That’s a fair punt.

It will spend, say, £2m of legal fees in attempt to avoid or reduce an award that is a minimum of £200m. 

Andrew Rigby short-listed for specialist of the year

Andrew Rigby and I attended a reception on Wednesday night to celebrate, along with all the with other nominees, Andrew’s short-listing in the specialist of the year category at this year’s Scott + Co Scottish Legal Awards.

The awards, winners of which will be announced on 19 March, promote excellence in Scotland’s legal profession, recognising leading firms and individuals across a number of categories. The judging panel is chaired by Margo MacDonald MSP and comprises independent experts from business, law and politics.

The short-listing reinforces Andrew’s status as a key player in the outsourcing field. As part of his work for Brodies’ Technology, Information and Outsourcing Group, Andrew has been instrumental in continuing to promote Scotland as an Outsourcing Hub – playing a pivotal role in trade visits to India last year to develop this initiative. Furthermore, his contribution to the outsourcing industry was formally recognised most recently in October 2009, when he was named ‘Outsourcing Professional of the Year’ at the National Outsourcing Association (NOA) Awards in London. Brodies was the only Scottish law firm short-listed at the awards.

Good luck for the 19th!

Apps, iPads and licensing issues

Since everyone else is blogging about the iPad, I thought I should too – to highlight a problem that sometimes arises from tightly drafted IP licences.

The iPad will use the same operating system as the iPhone, and will therefore run virtually all of the 100,000 or so iPhone apps already available through the app store. What happens if you are an iPhone app developer, and you discover that Apple is now selling that app to users of a different device, or you want to create an optimised iPad-specific version? “More revenue” you might say, but what about those third party licences that you have (eg for fonts, music, artwork etc), where your licence states that it is for use only in an “iPhone application”?

This is not a hypothetical question. A client (an iPhone app developer) asked me this last week. As it turns out, his licence agreements are fine, but he wondered what would happen if his third party licences referred only to the iPhone.

Well, if your licences are overly prescriptive, then you may have a problem, as any use outside that limited scope will potentially put you in breach of the licence. This is not uncommon. Software licensors use this approach all the time to drive more revenue out of their licensees (for example, where a group-wide licence lists named licensees, the licensor will often demand additional licence fees in order for a new subsidiary to use the systems used by the rest of the group).

You could try and argue that “iPhone application” is intended to cover an application which runs on the iPhone OS, and the fact that you can run it on another device running the same OS is incidental. How successful this argument is will depend on: (i) the exact terms of the licence; (ii) how important the IP is to the app; and (iii) how aggressive the licensor is in its pursuit of the matter (particularly given that it appears that there will be scope for developers to sell “premium” (more expensive) iPad versions of apps). Its unlikely that this will lead to any big court battles, but may mean that some developers have to fork out some more cash to keep their licensors happy.

The difficulty with the “but obviously” argument is that whilst you may think it obvious, they may not. Without being able to show that there was consensus of opinion when the licence was agreed, there is no agreement. This often happens when licences are not drafted in a way that is flexible enough (from the licensee’s perspective) to deal with future/changing use of technology.

Interestingly, the “scope of use” section in the current app store EULA grants users a licence to use apps on “any iPhone or iPod touch” that they own. Does that mean that the apps I have already bought for my iPhone can’t be used (legally) on an iPad? We will need to wait and see.

Zamaretto v. Hoover style Genericide

 Another blog entry about drink!

The other night I was watching TV and the break bumpers for the show (the mini adverts at the start and end of the main adverts) were for a drink called “Zamaretto” which appears to be flavoured Amaretto.

I had two thoughts: i) Yeuch; and ii) that has to infringe the “Amaretto” trade mark.

Eleanor and I discussed it the next day. It turns out that Amaretto is not protected by a registered trade mark (or at least not for drinks). Presumably this is because it is a generic term.

Let me explain. You can’t get registered trade mark (RTM) protection for a description of the goods being sold. So you can’t get a RTM for “Cola” or “Fizzy Drink”, but you can get a RTM for a brand such as “Pepsi” or “Cresta“. (Showing my age there!).

This prevents a RTM creating a product monopoly, e.g. a monopoly over cola.

(Product monopolies are not the job of registered trade marks, rather RTMs are limited brand monopolies, or badges of origin.  If you want a product monopoly you need a patent (harder to get) or a design right).

What happens if your product name starts to be used as a generic description of a product? For example, petrol used to be a brand name. Similarly lots of us call any vacuum cleaner a Hoover.

Well there is a risk that you lose your RTM protection. This is known as “genericide”. Nice term!

I am told that the fear of genericide drives Hoover to send out grumpy letters to any newspaper or tv company that uses the term “Hoover” generically. I don’t know if this is true. Perhaps I’ll get a letter from Hoover. If I do then I will post it here.

Also, as explained in Eleanor’s post on Vodkat a seller of an item with a generic and recognised product name, e.g. Vodka, can use the law of passing off to prevent sales of other types of goods under that generic name.   So, in our case, if Zamaretto was not made by using a tradtional Amaretto “recipe” (with the addition of flavour) then one of the traditional Amaretto sellers may be able to force it to rebrand.

Also I just noticed that Zamaretto is made by the same people that sold Vodkat.

Mine’s a beer. Cheers.


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