02 Oct 2018

COT's top four commercial issues - September 2018

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Welcome to this month's edition of the Stephenson Harwood commercial updates.

Despite the nights drawing in and autumn being upon us, there is no doubt that the following updates will brighten your day.

Enjoy.

CMA pursuing ticket resllers

On 31 August the Competition and Markets authority ("CMA") launched court action against ticket reseller Viagogo. The court action has come after the CMA launched an investigation in relation to Viagogo and other secondary tickets sellers such as StubHub, GETMEIN! and Seatwave in regards to suspected breaches of consumer law, including whether touts benefitted from relationships with those companies to gain advantage over genuine fans.

The CMA started enforcement action in relation to the investigation; however StubHub, GETMEIN! and Seatwave all offered formal commitments in April 2018 to make changes to the way they do business.

Additionally, on 13 August, Ticketmaster announced that it is closing its subsidiaries Seatwave and GETMEIN!. Although Ticketmaster will still allow tickets to be resold through its website, such tickets must be sold at the price originally paid or less.

However Viagogo, despite being warned, refused to make any commitments to changing its business practices. The CMA are concerned that consumers are:

  • not given all the information they are entitled to, including that there is a risk that they will be turned away at the door; 
  • not being told the identity of the ticket seller, so that they can benefit from enhanced legal rights when buying from a business;
  • are given misleading information about the availability and popularity of tickets - which may put the consumer under pressure to purchase tickets; 
  • experiencing difficulties in getting money back; and 
  • being offered tickets that a seller does not own and may not be able to supply.

The CMA are therefore now seeking a court order to end Viagogo's unfair business practices and is also seeking an interim enforcement order that will put a stop to some practices in the period until the full trial.

Cartier bears costs of eliminating counterfeits

The recent case of Cartier International AG and others v British Telecommunications Plc and another [2018] UKSC 28 became the first case heard before the Supreme Court to consider website blocking injunctions as a remedy for trade mark infringement.

The applicants in Cartier were are all involved in the design, manufacture and retail of luxury goods under well-known trademarks, including Cartier itself. These companies were seeking a website blocking injunction against the five largest internet service providers ("ISPs") serving the UK. The order was sought on the basis that the applicants' trademark rights were being infringed as a result of a number of unauthorised websites selling counterfeit watches and other high-end items.

The High Court found for the applicants in 2014. The court made a ground-breaking decision to grant the website blocking orders making this the first instance where such orders had been allowed against intermediaries on the basis of trade mark rights. In 2016 the Court of Appeal upheld the High Court's judgement requiring ISPs to prevent access to websites selling counterfeit goods. The final chapter in the Supreme Court related to an appeal by the ISPs as to whether rights holders should be required to bear the costs involved in implementing the injunction.

Both the High Court and the Court of Appeal held that the ISPs were liable for the relevant costs, submitting that these costs should be regarded as a consequence of carrying on the particular business that ISPs conduct. In the Court of Appeal, Lord Justice Briggs gave a dissenting judgement stating that the costs of implementing website blocking injunctions should be borne by the holders of trademark rights. He expressed the view that this approach would be consistent with that taken by the court in other situations where the "victim" pays the costs incurred by the innocent party when fulfilling an equitable duty to assist them.

The Supreme Court reversed these previous findings and held that the trademark rights holder should bear the costs of implementing the website blocking order. The court was concerned that there had been a departure from some of the fundamental principles of English law, where an innocent party should be indemnified against the cost of undertaking measures required to assist the "victim". There was no apparent reason why website blocking injunctions should be treated differently from the principles applied to Norwich Pharmacal orders, freezing orders and other injunctions, where the innocent party is indemnified for its costs. The court was convinced that the ISPs were acting as mere legally innocent conduits.

However, the court did note that different rules would apply to intermediaries participating in caching or hosting activities. Therefore where ISPs maintain a more active role, this approach to costs may not apply. 
The costs of implementing website blocking orders are generally minimal, however ISPs are likely to have been motivated by a concern that if they were to bear the costs, website blocking injunctions could become increasingly popular and result in significant costs cumulatively.

Law Commission paves the way for e-signatures

The Law Commission recently published a consultation paper (and summary paper) as part of its project on the electronic execution of documents. The project is driven by findings that many businesses are still reluctant to adopt and reply upon e-signatures due to the lack of legal certainty. In one case, the Commission said, a large organisation has its documents signed manually before scanning them and then shredding the originals, a practice it described as "inefficient’.

Electronic signatures can take many forms and the report uses the term broadly covering everything from scanned manuscript signatures to digital signatures and public key infrastructure. The consultation paper helpfully provides a summary of what the Commission believes to be the main types of electronic signatures. This can be as simple as typing a name in an email or applying a pre-scanned signature to a document. It can also include clicking on "I accept" on a website, using a finger or stylus to sign on a touchscreen and using a password or PIN. The various technological approaches have differing degrees of trustworthiness of the information and the identity of the person signing the information.

The Law Commission's provisional conclusion is that an electronic signature is capable of meeting a statutory requirement for a document to be "signed", where there is an intention to authenticate the document. The body, which advises the UK government on law reforms, said it believes existing legislation and case law is "sufficiently flexible to accommodate electronic signatures". They therefore do not consider legislative reform necessary to confirm the position on the validity of electronic signatures but suggest an industry working group be established to consider practical, technical issues.

In relation to the electronic execution of deeds, the provisional view is that, at present, a witness must be physically present to meet the formalities for witnessing (i.e. watching the signatory apply their electronic signature in the same location). In the Law Commission’s view, observing a signing by video link is unlikely to satisfy the current legal requirements for witnessing and attestation. They set out potential options for reform on the issue of witnessing and attesting deeds and deeds generally, including:

  • There should be legislative reform to permit witnessing via video link.
  • Outlining other potential options for reform which move away from the traditional requirement for witnessing and attestation, such as electronic acknowledgement.
  • Asking whether there should be a wider review of the law of deeds in a future project.

In some specific areas of law, including laws that require Land Registry documents to be in wet ink, parties to transactions face barriers to using e-signatures. Issues may also arise when cross-border enforcement may be needed.

These provisional conclusions have mostly been welcomed but some are disappointed that the Law Commission is not proposing legislative reform to clarify and confirm the validity of electronic signatures.  Scots law, for example, is clearer that e-signatures are valid and sets out the specific requirements that have to be met in order to rely on them thereby removing any uncertainty. The Commission has opened a consultation to invite opinion on whether a new law is required to legally enshrine the validity of e-signatures so they may yet be persuaded that reform is necessary. Responses are requested by 23 November 2018.

Apple releases health conscious watch

This month Apple unveiled a new smartwatch with revolutionary smart health features.

The watch displays electrocardiogram heart waveforms for the first time. This works via new sensors in its back and crown to allow users to check if their heart has an irregular rhythm. Additionally, the timepiece will automatically warn its user if it detects their heart is beating abnormally fast or slow during everyday use.

Apple said the app that provides these functions had been given "De Novo" clearance by the Food and Drug Administration - meaning that it is recognised as being an entirely new category of product that can legally be marketed in the US as being capable of providing health readings safely and efficiently.

A new fall-detection facility is also introduced via gyroscope and accelerometer sensors, which Apple said sampled data eight times faster than before. If the associated software believes the user has suffered a hard fall and remained immobile for a minute or more, it will send the emergency services an alert including the user's location, as well as contacting chosen friends or family if set to do so.

This move by Apple is part of a growing trend of smart devices being used to monitor health and wellbeing. The collection, use and storage of such key data will be a significant point of interest for the data protection regulators who will want to ensure such data doesn't get into the wrong hands and is used appropriately by those collecting it.

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KEY CONTACT

Dan Holland

Dan Holland
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T:  +44 20 7809 2108 M:  +44 7841 923 656 Email Dan | Vcard Office:  London

Anita Basi

Anita Basi
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David Berry

David Berry
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Michelle Gomes

Michelle Gomes
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Katie Hewson

Katie Hewson
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Naomi Leach

Naomi Leach
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Alison Llewellyn

Alison Llewellyn
Associate

T:  +44 20 7809 2278 M:  Email Alison | Vcard Office:  London