Chocolate-chip change – an update on the use of cookies

Cookies, the tiny files that are saved onto your hard drive when you visit websites, are used to store information about the way you interact with a website. The idea is that, by using this information, the website can give you a more efficient and personalised experience. Using cookies, advertisers can also collate information about the sort of websites that a user accesses in order to deliver adverts specific to a user’s ‘tastes’. This is a key part of a now lucrative industry: the UK’s online ad industry saw a turnover of £1.75bn in the first half of 2009. However the law relating to cookies changed today (26 May) and a number of issues will need to be addressed.

Previously: the “informed opt-out” system

Until now, it was enough that website operators made it possible for users to decline their cookie at some point. Usually the operator did this by maintaining a privacy policy which explained how cookies were used and how users could opt-out.

From 26 May 2011: the “prior, informed opt-in” system

Operators will need to obtain explicit consent from users before using cookies. There is debate over how this will be achieved in practice. Some suggest that internet browser providers could build-in settings that could allow users to specify what type of cookies they will accept in advance. Privacy groups argue that this does not represent ‘explicit consent’. The Information Commissioner suggests that browsers cannot presently be customised sufficiently well to enable a website operator to assume that a user has consented to downloading cookies via their browser settings.

Challenges and criticism

It has been said that the new rules overlook the technological complexity of the issue, that cookies play a crucial role in holding together the different layers of (often third party) content that make up modern commercial websites. A strict system of explicit consent for every cookie could unpick this construct, resulting in a poorer consumer experience as users are continually confronted with pop-ups seeking their consent. Some also speculate that tighter laws may lead to international publishers removing content from UK-targeted sites, or that key talent from within UK online advertising may relocate to less stringent locations like the US.

Guidance and enforcement

The Information Commissioner has noted that time will be needed for organisations to react to the new laws, so hard-line enforcement is likely to be some time away. In the meantime, the Commissioner has made it clear that organisations must be able to show that they are taking steps in response to the new rules. To help them do this, the Commissioner has published guidance which encourages focus on key areas such as:

  • the type and purpose of cookies that are used;
  • the level of intrusiveness involved; and
  • the best way for gaining users’ consent.

The enforcement agencies will have key roles to play in finding a balance between privacy concerns, consumer convenience and commercial efficiency. The months ahead will shed light on what these laws will come to mean in practice.

Stewart Dunbar
Trainee Solicitor

Scotland’s Spin-Out Success

Spinouts UK, a body that lists all spin-outs from UK universities, has suggested that Scottish universities produced more spin-out enterprises than any other region in the UK in the past decade. Spin-outs are created by universities seeking to harness the commercial potential of the intellectual property produced through their research and development functions.  These enterprises aim to make such ‘products’ marketable: applying business principles to secure funding, register patents and license the use of innovations.

Recent squeezes on funding for education may see even more spin-outs appearing as universities attempt to maximise returns on their intellectual property.  The climate is favourable for such set-ups: there are gaps in the market following the turbulence experienced by traditional companies.  There is also an ever expanding pool of talented personnel available as high calibre graduates struggle to find work in the mainstream job market and experienced employees in industry suffer from lay-offs. 

With success stories such as Dundee’s Cypex, Tayside Flow Technologies and Ceimig, as well as PhotoSynergy of St. Andrews, it is clear that spin-outs have the potential to play an important role in boosting Scotland’s economic recovery.

The corporate and commercial team at Blackadders is experienced in dealing with spin-outs and is well equipped to advise in this specialist area.

Stewart Dunbar

Trainee Solicitor

Admin for Ad Men: changes in online advertising regulation

Internet Keywords and Inter-flora versus Marks and Spencer plc

The Advocate General recently delivered an Opinion on a question put to the European Court of Justice involving alleged search engine keyword ‘coat-tailing’ by Marks & Spencer.  In that case, M&S sponsored the keyword ‘interflora’ on the Google AdWords system, so that users who searched for ‘interflora’ would see a link to M&S’ own flower delivery service in the sponsored links section.  Naturally, the owners of Interflora were not best pleased with this and sought to have M&S’ advert taken down as it infringed on their trademark.

The Advocate General recognised that a distinctive trademark (like ‘Interflora’ or ‘Kodak’) could be hijacked by competitors trying to gain an unfair advantage.  This is distinct from coat-tailing that is coincidental: a fruit & veg wholesaler who sponsors the word ‘apple’ it is unlikely to be unfairly taking advantage of the popular iPod manufacturer. However there was little doubt here that M&S was seeking to take advantage of Interflora’s popularity in sponsoring the keyword ‘interflora’: the Opinion recognised that there was a danger that consumers presented with a link to M&S Flowers after searching for ‘interflora’ could believe that M&S Flowers was a part of Interflora’s business network.

However the Advocate General stopped short of encouraging prohibiting all such ads. There are potential grey areas: even in the present case, some Google users may search for ‘interflora’ simply as a way to find a flower delivery service, rather than as a way of finding Interflora’s own website.  Further, in cases concerning trademarks less distinctive than ‘Interflora’, advertisers may simply argue that they are merely trying to present themselves as commercial alternatives and that customers generally have the ability to tell the difference between competing products.  The tension between the protection for trademark rights and the need for undistorted competition will clearly be an issue in such ‘grey area’ cases, which will need to be resolved on a case by case basis.

Interflora will find the Opinion very encouraging, and other holders of distinctive trademarks will take heart from the Court’s readiness to protect their rights in cases where competitors seek to exploit those trademarks in a bid to siphon away confused customers. The ECJ’s ruling on the case may clarify how similar matters will be treated by the courts.

The new Advertising Standards Agency rules

On 1 March this year, the ASA introduced new guidelines regulating the use of digital advertising. Since then, online advertising is now monitored in the same way as TV, radio and printed ads.

Online advertisers must now ensure that any “communication for a good, service, opportunity or gift that primarily sets out to sell something” must be “legal, honest, decent and truthful”. So, claims about the prowess of your business must be true, special offers must be valid and product descriptions must be accurate. This applies equally whether advertising on your own website, on a paid-for location (such as Google AdWords) or non paid-for locations which are under your control (like Facebook or Twitter).

Businesses should now review their digital marketing material as a matter of priority.  The ASA can force the removal of offending adverts, name and shame offenders and, interestingly, put up ‘counter-adverts’ highlighting an offender’s non-compliance.  In an age where record numbers of consumers go online for an ever increasing range of goods and services, businesses can ill-afford to have their online presence damaged by inviting such sanctions upon themselves.

Stewart Dunbar

Trainee Solicitor

Gender as a risk factor in assessing premiums

In a recent judgment by the European Court of Justice (ECJ), it was found that it is not legal for insurers to treat men and women differently for the purposes of calculating insurance premiums. This will have obvious implications for both the motor and life insurance industries. There has been a significant amount of press coverage given to this matter and are still questions as to how this will unfold within the UK.

The present position

Currently, insurers are permitted to use gender as a factor in assessing the risk level involved in insuring someone, which feeds directly into the level of premium which that person must therefore pay. This is legal so long as there are relevant statistics behind the decision. For instance, in motor insurance, the Association of British Insurers (ABI) state that young male drivers are statistically more likely to be involved in a car accident than young women: they present a greater insurance risk and so must pay a higher premium for their car insurance.

Future changes

Following the ECJ ruling, insurers in the UK will not be able to use gender as a risk-assessment factor after 21 December 2012. It remains to be seen how this will develop in practice within the UK, however the ABI states that it is more likely that we will see women’s insurance premiums rise rather than men’s premiums fall.

Implications for other industries

This ECJ ruling only affects insurance services. However it is noteworthy that pension providers also operate similar practices regarding gender: currently it is more expensive for women to purchase annuities due to their longer life expectancy. Additionally a person’s gender also affects how scheme benefits are calculated: in the factors used for calculating commuted lump sum payments, transfer credits and transfer payments.

These practices are open to the same criticism which the ECJ made of the insurance industry. On that basis, future changes to the costing of pension services are entirely possible. As such, it would be wise for both insurers and pension providers to closely monitor developments in this area over the months to come.

Stewart Dunbar
Trainee Solicitor

Delay to Bribery Act Implementation

Those with a compliance brief will be interested to hear that the Ministry of Justice has confirmed a delay in implementation of the Bribery Act.  The Act – which was one of those labeled “anti-growth” by outgoing CBI director general Sir Richard Lambert last week – was due to come into effect in April.  However, the Ministry of Justice has not yet issued the guidance for businesses that was slated for January, and the Act will not now come into force until 3 months after this has been issued.

As yet, there is no date fixed for the issue of guidance.  A draft of the guidance was issued for consultation in September last year, and my own feeling was that while it was a start, it was very general, and the examples it gave only related to overseas business.  If the result of the delay is to provide more focused guidance that is targeted at all types of organisation – large and small, regional, national and international, the delay will have been a good thing.  It will also give those organisations who have not given serious consideration to corruption issues more time to get their house in order.

The Bribery Act extends the scope of current anti-corruption laws, and will expose all organizations to the risk of prosecution if they do not have appropriate anti-corruption procedures in place.  We ran a seminar on this topic in October last year and will continue to keep clients and contacts up to date with progress.

Please contact me for further information or for help in assessing your organisation’s risk profile and formulating appropriate procedures.

Campbell Clark
Head of Corporate & Commercial

Copyright – where are we going now?

Few areas of law divide opinion quite like the law of copyright.

Copyright protects the tangible expression of ideas across various categories of work.  The principal purpose of copyright law is to ensure that the creators of original works are rewarded for their endeavours.  However, as is well documented, the digital age has presented the system with a whole raft of problems and not everyone can agree upon how they should be solved.

Scroll to the comments section of any online article on the subject and you are likely to find furious debate raging between those who champion the rights of the creative industries and others who believe in the free access and distribution of content.  The UK has long grappled to balance these competing interests but has yet to devise a legal framework which satisfies everyone or, arguably, anyone.

Recent Developments

The Digital Economy Act 2010 (DEA) was pushed through in the dying days of the Labour government and introduced various measures designed to counter online copyright infringement.  These included imposing obligations on internet service providers (ISPs), such as BT and Talk Talk, to take action against suspected infringers and even disconnect them altogether.  However, last month the High Court ordered a judicial review of the DEA in order to determine whether it is legal and justifiable.  This could ultimately result in aspects of the DEA being amended or even scrapped altogether.

Only days before the decision to carry out a judicial review was taken, Prime Minister David Cameron announced that he had ordered an independent review of the UK’s intellectual property laws in order to determine whether they are “fit for the internet age”.  Mr Cameron pointed to the “fair-use” copyright exceptions that exist in the US, opining that they encourage creative innovation and warning that the founders of Google had advised that they could not have formed their business in Britain.

Although the exceptions to copyright infringement in the UK are certainly more rigid than those enjoyed by our friends across the Pond, it is worth bearing in mind that the manner in which the courts in each country have interpreted the relevant legislation over the years has not been dramatically different.  Moreover, the results of a consultation conducted by the Intellectual Property Office (IPO) as recently as 2009 indicate that opinions on copyright exceptions remain somewhat divergent.  As such, some question the value of yet another review in this area.

The Future

So what exactly does the future hold for copyright law in the UK?  The short answer is that nobody really knows.  My view is that the law is likely to be tinkered with further in the coming years, but exactly what changes will be made remains unclear.  As ever, the acid test will be how the courts interpret any new legislation.

What changes would you like to see made to the law of copyright?  We’d be delighted to hear from you.

If you require advice on the subject of copyright or any other aspect of intellectual property law, please contact me at kirk.dailly@blackadders.co.uk or on 01382 342453.

Bribery Act 2010 seminar

It has been very interesting to deliver seminars in Aberdeen and Glasgow this month on the implications of the new Bribery Act 2010. It is scheduled to come into force in April 2011 and the Ministry of Justice started consultation on guidance on anti-bribery procedures last week. The new law is set to be on the agenda for all organisations – private, public and third sectors – in the coming months.

What became clear in discussion with delegates at both seminars is that the new Act will, I think, change the perception that corruption is really only a risk for the largest corporates bidding for large, oversea government contracts. Prosecution will also be made significantly easier.

Two new aspects of the law in particular provoked discussion. The first was that people or organisations with a UK association can be prosecuted in the UK for actions carried out exclusively overseas. They will normally be judged by UK standards and not the common practice in the relevant overseas territory. This is likely to present a risk to large numbers of businesses doing business overseas who, for example, reluctantly make “facilitation payments” as it appears to be the only way to do business effectively.

Secondly, if anyone associated with an organisation commits a corrupt act (here or overseas), the organisation, as well as the individual, can be prosecuted. It does not matter that, for example, the board of directors was unaware that an agent was engaging in corrupt practices. The only defence is for the organisation to demonstrate that it had adequate anti-bribery procedures in place. This will be the focus for many organisations between now and April: reviewing current procedures or putting procedures in place for the first time.

I’m presenting a seminar in Dundee on 28 October which is open to all and I hope the discussion will help as many as possible understand how this new law is likely to affect their organisation and start thinking about any action they need to take to mitigate the risks.

To register to attend the free seminar please email chris.terry@blackadders.co.uk.

Campbell Clark
Partner