HomeInsightsNeed to Know – 2012.10.15

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General

European Parliament’s Culture Committee adopts report on keeping children safe online.

High Court finds guarantors liable under an all monies continuing guarantee notwithstanding the alleged lack of notice of variation of the underlying contract.

European Internal Market Committee MEPs adopt non-binding resolution on removing obstacles to digital single market.

European Parliament Economic Affairs Committee backs Common European Sales Law.

Technology

European Commissioner Neelie Kroes gives update on “Do Not Track” technology.

PhonepayPlus issues record £800,000 fine for newspaper competitions that targeted the elderly.

PhonepayPlus fines company £450,000 for misleading promotions on Facebook.

Data Protection

Article 29 Data Protection Working Party adopts further opinion on proposed European data protection reforms.

Broadcasting

Ofcom finds Bombardier beer sponsorship campaign on TV channel Dave unacceptable because of link with sexual activity.

Litigation

Court of Appeal revises earlier decision in relation to 10% increase in general damages so as not to apply where claimant entered conditional fee agreement before 1 April 2013.

Publishing

Defamation Bill has second reading in House of Lords.

Film & TV

European Commissioners Neelie Kroes and Androulla Vassiliou make joint statement on digital opportunities for distribution and financing of European films in EU digital market.

Advertising

Committee of Advertising Practice publishes guidance on perfume and underwear ads in context of recent Government report on sexualisation of children.

General

European Parliament’s Culture Committee adopts report on keeping children safe online.

The report, written by Italian Social Democrat Silvia Costa, stresses the need for children to be taught about the “digital world”.  The original European Commission report had also focused on education, finding that parents and educators were failing to keep pace with technological changes in the lives of their children.

The EU’s Safer Internet Programme funds public awareness activities, actions for fighting illegal and harmful content online and actions promoting a safer online environment.  Ms Costa said the programme should be continued and be given more resources as illegal and harmful content is still too easy to access.

Ms Costa also spoke out in support of the Commission’s proposal for a “right to be forgotten”.  This could lead to a ban on preserving personal data online.  According to Ms Costa, Member States should also continue to harmonise the classification of digital content for minors.

The report also calls on the Commission to propose a single framework Directive on children’s rights in the digital world.  To read the European Parliament’s press release in full and for a link to the report and to the Commission’s report, click here.

High Court finds guarantors liable under an all monies continuing guarantee notwithstanding the alleged lack of notice of variation of the underlying contract.

On finding two shareholders liable under personal guarantees for sums due to an industrial and provident society, of which their construction company was a member, the High Court held that the rule that a guarantor is discharged from his obligations where the contract that is guaranteed has been varied without his consent does not apply where from the outset the guaranteed obligations expressly extend to sums “owing” or to “become owing” without limit. 

Here, the guarantee did not cover the underlying contract as such but all sums now or hereafter due.  Thus, there was nothing to vary, so as to engage the rule.  In the court’s view, the relevant question was whether the guaranteed obligation extended beyond the existing obligation to other obligations present or future.  If it extended to future obligations, it necessarily followed that it could not be affected by agreements that altered or increased the liability of the debtor.  The court must ascertain this from the words of the guarantee and the surrounding circumstances.  (National Merchant Buying Society Ltd v Andrew Bellamy [2012] EWHC 2563 (Ch) (27 July 2012)).

European Internal Market Committee MEPs adopt non-binding resolution on removing obstacles to digital single market.

The non-binding resolution, drafted by Pablo Arias Echeverría (EPP, SP), analyses, and sets out proposals to remove, obstacles currently preventing EU businesses from reaping the full benefits of the digital single market. 

One proposal is to introduce a “European Trustmark” certifying that an online shop fully complies with EU law.  This should make the online market more transparent for consumers and boost confidence in online shopping, says the Committee.  According to the Committee, only around 7% of internet users have ever placed a cross-border order within the EU.  This reluctance to buy across borders not only deprives Europe’s consumers of single market benefits such as a wider choice of goods and lower prices, but also impedes its economic growth, the Committee says.

Barriers to cross-border goods delivery services also prevent EU consumers from shopping on the internet.  Worries about the reliability of delivery prevent almost one in two from shopping online across borders.  In the resolution, MEPs stress the importance of ensuring reliability, speed of delivery and efficient return systems, which they say are best promoted by free and fair competition.  Measures to ensure reasonably priced delivery to remote or outlying areas should also be considered, they say.

In the resolution, MEPs call on the Commission and EU Member States to develop and implement measures to complete a neutral and safe EU regulatory framework for online and mobile payments.  In addition, they call for an action plan to integrate SMEs, which form the backbone of the EU economy, into the digital single market.  Finally, they call on the Commission to develop a strategy to boost digital entrepreneurship, promote training for online traders, and encourage digital development programmes for SMEs.

The resolution was adopted with 32 votes in favour and 2 against.  It is scheduled for a plenary vote in November.  To read the Committee’s press release in full, click here.

European Parliament Economic Affairs Committee backs Common European Sales Law.

The Commission’s proposal of 11 October 2011 for a Regulation on a common European sales law aims, the Commission says, to “help break down barriers to trade resulting from divergent national sales laws and give consumers more choice and protection when shopping across borders”.  It will, the Commission says, facilitate trade by offering a single set of rules for cross-border contracts in all 27 EU countries.  If traders offer their products on the basis of the Common European Sales Law, consumers would have the option of “choosing a user-friendly contract law regime with a high level of protection with just one click of a mouse”.  The Commission says that traders who are dissuaded from cross-border transactions due to contract law obstacles forgo at least €26 billion in intra-EU trade every year.

The Parliament’s Legal Affairs and Internal Market Committees are currently also preparing reports on the proposals, to be finalised in the coming months.

Commissioner Viviane Reding said, “The optional Common European Sales Law will help kick-start the Single Market, Europe’s engine for economic growth.  It will provide firms with an easy and cheap way to expand their business to new markets in Europe while giving consumers better deals and a high level of protection.  Instead of setting aside national laws, the European Commission is taking an innovative approach based on free choice, subsidiarity and competition”.  To read the Commission’s press release in full, click here.

Technology

European Commissioner Neelie Kroes gives update on “Do Not Track” technology.

Speaking at the Centre for European Policy Studies in Brussels on 11 October 2012, Commissioner Kroes said that “Online privacy and online business need to go hand in hand” and that “Privacy is a fundamental right; if your idea doesn’t work with that, it won’t work at all” as people will not use what they do not trust. 

Ms Kroes called for a corporate culture that respects its customers and their privacy.  This involves being transparent, making all citizens aware of what is at stake, and respecting the new so-called “cookie rules”, which require informed consent before information is stored or accessed on a user’s device.  In June last year, Ms Kroes urged all interested parties to come to the standardisation table and agree a “Do Not Track” standard.  In Ms Kroes’ view, “Do Not Track” technology can help with cookie consent as it provides a universal mechanism to communicate consent or lack of consent.  It should apply to tracking via cookies and other means, she said, and it should apply to all network devices and applications, independently of the purpose of tracking.  

Ms Kroes noted that, since June 2011, several browser manufacturers have incorporated “Do Not Track” technology but, she said, “standardisation work is not going according to plan”.  First, the problem is that the standard is being watered down when, as Ms Kroes said last year, “the DNT standard must be rich and meaningful enough to make a difference, when it comes to protecting people’s privacy”.  Further, it should build on the principle of informed consent, giving people control over their information and “it must be designed to let people choose to not be tracked.  The clue is in the name: do NOT track”.

Ms Kroes outlined her specific concerns:

  1. how users are informed about default settings in their software and devices is a “crucial aspect”.  At installation or first use, users must be informed about the importance of their “Do Not Track” choice.  They must be told about any default setting and prompted to keep or to change it;
  2. the standard should not let websites second-guess or disregard user choices; and 
  3. what can be done without consent should be limited and justifiable in the light of the standard’s overall aim.  The exceptions currently being discussed “seem extremely broad”.

In short, Ms Kroes said, “there are many reasons for concern.  Time is not on our side.  So to all of those taking part in these discussions I say today: you need to find a good consensus – and fast”.

Ms Kroes reminded businesses that “The cookie consent rules will be enforced and providers will have to comply”.   Therefore, developing adequate “Do Not Track” rules is “in everyone’s interest”.  

Ms Kroes concluded that “A sound [“Do Not Track”] standard will be successful.  I have no doubt about that”. However, she is “worried about the soundness of what we are getting – and about the slow speed”.  In Ms Kroes’ view, “a rich standard is still possible”.  It may take a few additional months, but it is still, at the moment, the best outcome for everyone, she said.  To read Ms Kroes’ speech in full, click here.

PhonepayPlus issues record £800,000 fine for newspaper competitions that targeted the elderly.

The record £800,000 fine was issued against a company whose repeat direct mail marketing for competitions misled elderly consumers, PhonepayPlus said.

The UK regulator of premium rate telephone services took action against the premium rate line competitions run by Churchcastle Ltd, which were widely advertised in newspapers and magazines nationwide.  These competitions were followed up by misleading direct mail marketing that encouraged consumers, many of whom were elderly, to continue to engage with the premium rate service, often at considerable expense.

PhonepayPlus found that word search competitions were carried by around 50 publications across the UK, including a number of major national newspapers.  Once a consumer had entered the competition and provided contact details, they received a variety of direct mail marketing that encouraged them to continue to engage with the competition.  Some consumers received up to four promotions a week.  The marketing was highly personalised and included letters designed to look hand-written.  For example, Easter cards gave the impression that the consumer was part of a select group of participants and they were very close to winning.  Prizes, such as low-quality jewellery described as “strictly limited” and “rare”, were also offered.  PhonepayPlus found that the cost of calling the premium rate numbers was “either unclear or not prominently placed in these direct mail promotions”.

Paul Whiteing, Chief Executive of PhonepayPlus said: “We are saddened that elderly consumers have been misled in this cynical way.  PhonepayPlus will not tolerate any misleading activity that takes advantage of vulnerable people and we encourage anybody who is concerned about an elderly relative’s use of premium rate services to contact us or check our website for advice at www.phonepayplus.org.uk“.  To read PhonepayPlus’ press release in full and for a link to the full adjudication, click here.

PhonepayPlus fines company £450,000 for misleading promotions on Facebook.

The regulator is warning consumers about deliberately misleading promotions on social media sites, such as Facebook.  This follows the issuing of fines by the regulator totalling £450,000 against two companies for misleading promotions on social media and networking sites.

In two separate cases, Amazecell Ltd and mBill Pty Ltd both employed affiliate marketers to promote their premium rate competitions online.  PhonepayPlus found that in both cases the services “took advantage of social networkers’ trust in what their social media friends ‘shared’ or ‘liked’”.  Consumers would see that their friends had “shared” a particular promotion.  These promotions included the promise of a voucher worth up to £250 for major retailers, including Tesco and Asda.  In some cases, misleading content was automatically posted onto consumers’ Facebook walls without their knowledge.  In other cases, to take part in the competition the consumer was required to also “share” the promotions, which would appear on their personal wall.  In this way, PhonepayPlus said, “the promotions traded on users’ trust in each other to spread virally through various social networks”.

After clicking on the promotion consumers were, PhonepayPlus found, misled into participating in premium rate competitions.  Consumers believed that these were stages towards receiving the promoted offer and did not realise that by entering their phone number they would be charged.  At least one affiliate marketer promoted the Amazecell competition by masking the terms and conditions, including pricing, from the actual competition page. In the Amazecell case, consumers were charged £5 per question sent to their phone.  Consumers were subsequently charged for further questions regardless of whether or not they answered them.  Over 89,000 consumers entered the promotion only once but were sent a second question for which they were charged.

PhonepayPlus found that the companies had breached the Code of Practice by misleading consumers and not providing clear pricing information.  Amazecell Ltd was fined £300,000 and mBill Pty Ltd was fined £150,000.  Both have been ordered to refund any consumer who requests a refund.  To read PhonepayPlus’ press release and for links to the adjudications, click here.

Data Protection

Article 29 Data Protection Working Party adopts further opinion on proposed European data protection reforms.

In its opinion of 23 March 2012, the Article 29 Working Party provided its first general reaction to the European Commission’s proposals, highlighting areas of concern and making certain suggestions for improvement.  It has now adopted a further opinion providing “further guidance, notably on certain key data protection concepts […] analysing the need for and the effect of the proposed delegated acts and where necessary suggesting more suitable alternatives”.

The Working Party says that some of those who have raised concerns about the impact of the proposed Regulation are focusing their attention on the key concepts of personal data and consent.  The Working Party believes that this is mistaken.  In order properly to protect the privacy of personal information and to future-proof the Regulation, it is necessary, the Working Party says, to adopt a broad definition of personal data and to ensure that where consent is relied on, the consent is of a high standard.  If the adoption of these key concepts leads to disproportionate outcomes in the application of the Regulation, it is on the provisions of the Regulation and the exceptions to them, not the key concepts themselves, that attention should be focused.

On the definition of “personal data”, the Working Party welcomes the definition of “data subject” in Article 4(1) of the proposed Regulation, which states that a “data subject means an identified natural person or a natural person who can be identified…”.  However, the Working Party notes that this definition “does not fundamentally change the notion of personal data as defined in Directive 95/46/EC, but only reorganises its different elements”.  Therefore, a natural person can be considered identifiable when, within a group of persons, he or she can be distinguished from other members of the group and consequently be treated differently.  The Working Party therefore suggests clarifying Recital 23 and Article 4 so that it is clear that “the notion of identifiability also includes singling out in this way”.

As for “consent”, the Working Party notes that the draft Regulation introduces “new and positive elements in particular by imposing the burden of proof on the controller, by introducing safeguards in the context of a written declaration and by excluding the validity of the consent where there is a significant imbalance between the position of the data subject and the controller”.  The Working Party says that it “very much welcomes these important clarifications and strengthening of the rights of individuals”.  Further, the Working Party says that the inclusion of the word “explicit” is “an important clarification in the text, which is necessary to truly enable data subjects to exercise their rights, especially on the Internet where there is now too much improper use of consent.  It would be highly undesirable should this important clarification be deleted from the text”.

On the proposed delegated acts, the Working Party emphasises that the adoption of delegated and implementing acts “should only be inserted in cases where the Commission can substantiate that is indeed necessary”.  In the Annex to the Opinion, the Working Party analyses each proposed delegated act and assesses whether that is, in fact, the best way to deal with the data protection issue in question.  For a link to the Opinion, click here.

Broadcasting

Ofcom finds Bombardier beer sponsorship campaign on TV channel Dave unacceptable because of link with sexual activity.

The post-9pm sponsorship credit featured the character, Bombardier, portrayed as a legendary soldier.  It showed Bombardier seated and partially covered by a blanket on a battlefield.  He then looked at the camera and said: “Ah, the sweet kiss of Summer” followed by a woman appearing from Bombardier’s lap under the blanket, at which point he looked at her and said: “hello Summer”.  The woman looked at the Bombardier, smiled and laughed and went back under the blanket into Bombardier’s lap.

Thirteen complainants raised concerns that the credit appeared to link the alcohol brand Bombardier with a sexual act.

UKTV argued that the character was not seen consuming or interacting with alcohol, and suggested that it was therefore difficult to “determine a link [to sexual activity] without any references to alcohol”.

Upholding the complaints, Ofcom considered that the credit linked sexual activity with an alcoholic drink, in breach of Rule 9.17 of the Broadcasting Code, with reference to Rule 19.6 of the BCAP Code.  Rule 9.17 states that sponsorship must comply with both the content and scheduling rules that apply to television advertising and while rule 19.6 of the BCAP Code does not refer specifically to the consumption of alcohol it provides that advertisements must not link alcohol to sexual activity.

Whilst Ofcom accepted that the focus of the credit was the Bombardier character, it considered that the clear link with the character, the Bombardier brand and Bombardier beer meant that the character symbolised and embodied the brand.  It therefore considered that the Bombardier character was intrinsically linked with an alcoholic drink, irrespective of the fact that the characters in the credit were not shown to be consuming alcohol.  Ofcom also considered that the appearance of the woman from under the blanket in Bombardier’s lap and the script of this credit clearly implied that the woman had been performing oral sex on Bombardier.  To read Ofcom’s adjudication on Bombardier’s sponsorship of Primetime published in Issue 215 of the Broadcast Bulletin (8 October 2012) click here.

Litigation

Court of Appeal revises earlier decision in relation to 10% increase in general damages so as not to apply where claimant entered conditional fee agreement before 1 April 2013.

Following the decision by the Court of Appeal in Christopher Simmons v Derek Castle [2012] EWCA Civ 1039, in which the court held that the level of general damages in most civil cases would increase by 10%, the Association of British Insurers applied to the court asking it to reconsider its judgment on the grounds that it would “upset the carefully balanced package of Government reforms to the civil litigation system by introducing the 10% increase in general damages ahead of other measures”.  

Under the original decision, the 10% increase would have applied to all cases decided after 1 April 2013, meaning that some claimants might have been able to claim enhanced damages, together with any “success fee” under a CFA.  The court has now revised its decision and the increase will not be introduced in cases where the claimant has entered a CFA before 1 April 2013.  For any cases started after this date the 10% increase will be balanced by reductions in legal costs in line with the Government’s other reforms relating to civil litigation costs, such as the end of “success fees”. 

James Dalton, the ABI’s Assistant Director of Motor and Liability, said: “We are pleased that the Court recognised that the original judgment upset the package of measures which feature in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and which were originally intended by Lord Justice Jackson to maintain a careful balance between the interests of claimants and defendants.  We are also pleased that the Court now acknowledges that it should have sought submissions from ABI and other interested parties before announcing the increase”.  (Christopher Simmons v Derek Castle [2012] EWCA Civ 1288 (10 October 2012) – to read the judgment in full, click here.  To read the AIB’s press release, click here).

Publishing

Defamation Bill has second reading in House of Lords.

During the debate, the purpose of the bill was outlined with Lord McNally (Liberal Democrat) describing the proposed legislation as “a sound, reforming bill and one that I hope can command cross-party support”.

However, several areas of concern were identified.  Lord Browne of Ladyton (Labour) confirmed his support for the bill, but said that clause 5, which seeks to establish a framework to allow people to protect their reputations online whilst also protecting website operators from casual threats of litigation was “ill thought-out and incomplete”.  He said that it effectively created a new defence for website operators where a defamation action is brought against them in respect of a statement posted on their website.

Viscount Colvill of Culross (Crossbench) declared an interest as a current BBC producer/director.  He spoke of the effect of current libel laws on journalism: “The present libel laws are costing respectable media organisations a fortune in their own lawyers’ fees and are exhausting journalistic talent in refuting these claims”.

Lord Sugar (Labour) drew attention to the need to ensure that damages awarded as a result of libel action are increased to account for the costs of funding a defamation case.

Lord Black of Brentwood (Conservative) declared an interest as the executive director of the Telegraph Media Group.  He welcomed the bill but expressed concern that it did not yet do enough to deal with libel tourism: “It therefore does not address the problem of media companies in an age of global media being vulnerable to being sued in different jurisdictions under different laws for the same publication”.

The debate will continue with line-by-line scrutiny in Committee stage.  To read the House of Lords press release in full and for a link to Parliament TV to watch the debate, click here.

Film & TV

European Commissioners Neelie Kroes and Androulla Vassiliou make joint statement on digital opportunities for distribution and financing of European films in EU digital market.

The joint statement follows a roundtable meeting in Cannes on 9 October 2012 attended by representatives of the film industry, including distributors, film directors, producers, broadcasters and telecom operators, to discuss the opportunities created by the digital revolution for the distribution and financing of European films in the EU digital market.

Both Commissioner Kroes and Commissioner Vassiliou share the view that digital technology has opened up new possibilities for the distribution of European films.  They urge the European film industry to “reap the full benefits of this technological progress and adapt their business models in order to better disseminate European films, increase their audience and improve the conditions of their financing”.

Both Commissioners acknowledge that new distribution methods and new business models mean potential additional sources for film financing.  Bigger audiences also mean potential additional revenue.  They also recognise that EU territorial fragmentation remains a challenge, but consider that Europe’s myriad of languages and cultures is a spur for creativity.

The digital shift from an economic model based on the limited offer of television channels to one based on user demand makes it even more urgent for rights-holders to strengthen their online distribution strategy, they say.  European films need to be increasingly present in VoD platforms.  Rights-holders should strengthen the presence of European films on global platforms including iTunes and Netflix with efficient promotion and branding.

The Commissioners underline the importance of the cinema, and recognise that theatrical release plays a crucial role in creating the brand identity of a film and has an impact on its success on other distribution platforms.  Nonetheless, they recognise that the sector faces major challenges in terms of adapting release window practices in most Member States and for exploiting the new opportunities offered by digital distribution.

The roundtable explored whether the current windowing system is still best suited to the new distribution models, taking into account changing audience behaviour (content anytime, anyhow, anywhere) and the fact that new players like the operators of VoD platforms or Connected TV manufacturers/Hybrid TV platform operators are potential investors in film production.  Both Commissioners acknowledge that new distribution methods and business models can generate new sources of film financing which are not necessarily detrimental to cinema distribution or the audience of broadcasting services.  They underline that the relationship between theatre release and other forms of distribution does not need to be a zero-sum game.  Direct competition does not necessarily exist between cinema, on the one hand, and DVD and/or VoD, on the other.  The roundtable supported experiments with simultaneous or near-simultaneous releases of films (VoD and cinema) that have taken place in some countries.

The results of the discussion will feed into the preparation of the Commission proposal for a Council Recommendation on European film in the digital era.  The Commission says that it will continue to consult with Member States and stakeholders on the best way to promote the visibility of and access to European films in the digital era.  To read the press release in full, click here.

Advertising

Committee of Advertising Practice publishes guidance on perfume and underwear ads in context of recent Government report on sexualisation of children.

The CAP reminds advertisers and marketers of the independent report, Letting Children be Children, commissioned by the Government, which called on businesses, broadcasters, advertisers and regulators to take a joined-up approach to addressing parents’ concerns about a “sexualised culture” surrounding children.  Some of the recommendations related specifically to the advertising industry and the work of the ASA.

CAP notes that one of the ASA’s key objectives in response to the report is to protect children from inappropriate sexual imagery in outdoor advertising, particularly in locations of relevance to children, for example near schools.   Marketers should note, the CAP says, that conformity with the CAP Code is assessed “according to the marketing communication’s probable impact when taken as a whole and in context”.  Therefore, the ASA will take into account the content and context of the ad, the medium in which it appears and the audience (including their likely response) when it considers ads under the Code.

Two products often given as Christmas presents, perfume and lingerie, were the subject of two important ASA adjudications in this context last year.  With Christmas campaigns in mind, marketers should, the CAP says, heed the lessons arising from these adjudications.  The first was in relation to a Marks and Spencer poster for lingerie shown on the side of buses, which complainants objected to as overtly sexual and unsuitable to be seen by children.  The second was in relation to a magazine ad for Marc Jacobs’ Oh Lola perfume, which readers said was offensive and irresponsible because it portrayed the young model in a sexualised manner.  In the case of the M&S ad the ASA found that it was unsuitable to be seen by children, but it was not likely to cause serious or widespread offence.  As for the Marc Jacobs ad, the ASA found that the ad was both irresponsible and likely to cause serious offence.

The CAP notes that some commentators have highlighted the clothing and perfume industry as the major proponents of “sex sells” marketing campaigns.  The ASA understands that such imagery is used to attract the attention of consumers, it says, but calls on the industries “to take into consideration public sensitivities about children, and to acknowledge the requirement to produce socially responsible marketing communications under the Advertising Codes”.  To read the guidance in full and for links to the M&S and Marc Jacobs adjudications, click here.

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