HomeInsightsNeed to Know – 2013.02.25

Contact

+44 (0)20 7612 9612
info@wiggin.co.uk

It is intended for reference purposes only and does not constitute definitive advice. Links to the original source materials are included where there are no restrictions in terms of access. References may also be made to sources that require separate registration or subscription. A link to a source does not necessarily imply endorsement of the source or the material provided through the link. For further information on any of the matters discussed in this summary please contact Alexander Ross. If you have any comments, queries or suggestions please contact us at comments. All suggestions and comments are most welcome. If you do not wish to receive this summary you can contact us at unsubscribe@wiggin.co.uk.

General

European Commission welcomes European Parliament Committee support for optional Common European Sales Law.

Court of Appeal finds that a contractual clause excluding liability for non-performance would defy business common sense in the context of the agreement as a whole.

Technology

Government finalises agreement for unified patent court to be based in London.

European Commission consults on proposal for revised competition regime for technology transfer agreements.

Ofcom announces winners of 4G spectrum auction.

European Copyright Society says hyperlinking to copyright content is not “communication to the public” of that work and is therefore not infringement.

European Network and Information Security Agency could be given new powers to assist battle against cybercrime.

Data Protection

Information Commissioner’s Office publishes consultation on data protection and the press Code of Practice.

European Parliament’s Industry, Research and Energy committee backs proposed European data protection reforms.

Broadcasting

Ofcom consults on proposals regarding ITV, STV, UTV and Channel 5 TV broadcast licences.

Ofcom considers matter of broadcast of most offensive language during pre-watershed live coverage of the Abu Dhabi Grand Prix resolved thanks to swift remedial action from BBC and Sky Sports F1.

Prize Draws, Promotions and Competitions

ASA finds Debenhams’ email voucher promotion unfair after Daily Mail pulls voucher space.

Publishing

European Parliament calls for annual EU monitoring of Member States’ media laws.

Press Complaints Commission upholds complaint by Cleveland Police against Daily Mirror, which had named a victim of sexual assault.

Press Complaints Commission upholds complaint against regional newspaper for undercover report on direct-selling scheme.

Court of Appeal considers defamation online finding that, potentially, online platforms might be “publishers” at common law and therefore liable.

Film & TV

European Commissioner Neelie Kroes says “release windows” for films prevent the sector from getting digital benefits.

Corporate

Supreme Court dismisses appeal to “pierce the corporate veil” and find directors parties to the company’s contracts.

Advertising

Advertising Standards Authority publishes advice on using animals in adverts.

Committees of Advertising Practice announce changes to price comparison rules and to rules governing price claims inclusive or exclusive of VAT.

General

European Commission welcomes European Parliament Committee support for optional Common European Sales Law.

The Commission has welcomed the draft report from the European Parliament’s Legal Affairs Committee backing optional EU-wide rules for businesses and consumers concluding contracts in the Single Market.  In their draft report, the co-rapporteurs of the European Parliament Legal Affairs Committee, MEP Klaus-Heiner Lehne and MEP Luigi Berlinguer, backed the Commission’s proposal for a Common European Sales Law.  

However, they suggested limiting the scope of the Common European Sales Law to distance contracts, most notably online contracts.  The Commission says that, given the need to complete the Digital Single Market, this restriction of scope in the rapporteurs’ opinion suggests that the core added value of this optional instrument lies in the field of online business.

The Commission says that an optional EU-wide contract law would “promote growth by making it cheaper for businesses to access new markets and offering consumers a greater choice of products at more competitive prices”.  It would also “promote the Digital Single Market by providing a coherent set of rules for the marketing of digital products and related services which may also apply when some of these products are provided using the Cloud”.  The Committee is due to vote on the report in the coming months.  To read the Commission’s press release in full, click here.

Court of Appeal finds that a contractual clause excluding liability for non-performance would defy business common sense in the context of the agreement as a whole.

The principle that underlies this decision is that parties to a contract cannot have contemplated that an exclusion clause should be so wide as to deprive one party’s stipulations of all contractual force (see Suisse Atlantique [1967] 1 AC 361).  The presumption is that neither party to a contract intends to abandon any remedies for its breach arising by operation of law and that clear words are needed to rebut that presumption (see Modern Engineering v Gilbert-Ash [1974] AC 689). 

The dilemma for the court in this case was that an exclusion clause in the five year catering services agreement appeared, on the face of it, to be inconsistent with both principle and presumption by excluding liability for lost profits arising not only on defective performance but on refusal to perform the contract at all.  The court resolved that dilemma by construing the exclusion clause in its “wider context”, something the judge below had failed to do.  In the result, the court concluded that to construe the clause as excluding liability for refusal to perform would defy common sense in the context of the agreement as a whole.

The relevant clause provided that:

…the Company shall have no liability whatsoever in contract, tort (including negligence) or otherwise for any loss of goodwill, business, revenue or profits…suffered by the Contractor or any third party in relation to this Agreement…

The judge at first instance considered the clause “perfectly clear” and that it was neither necessary nor appropriate “for the court to consider what the parties could possibly have intended if what they have actually stated is clear and unambiguous”. 

On appeal, the court found that the judge fell into error in thinking that the ascertainment of the meaning of the apparently clear words was not itself a process of contractual construction.  Tomlinson LJ held that the judge had failed to consider the words of the clause in their wider context, which included the section of the agreement in which the clause appeared.  That section also included an indemnity, which although only arising on the company’s negligence, was wide-ranging.  The key to the proper construction of the exclusion clause was, in Tomlinson LJ’s view, that it excluded heads of loss “suffered by the Contractor or any third party in relation to this Agreement”.  In that context, the third party loss could only be a loss suffered in consequence of negligent performance by the company of its contractual obligation, express or implied.  It was only such third party losses that would, if suffered by the contractor, generate in the company an obligation to indemnify.  Such a loss presupposed defective performance of the contract but not a refusal to perform it or to be bound by it.  The company did not undertake to indemnify the contractor against liability that it incurred to third parties as a result of the company refusing to perform the contract.  In Tomlinson LJ’s view, the parties had intended to exclude or qualify a similar type of loss, whether suffered directly or indirectly by the contractor, i.e. a loss arising out of the flawed performance of the contract.  Had it been intended simply to exclude all liability for loss of profits in the event of any breach by the company, including a simple refusal to perform, there would have been no need to refer to third party losses as a separate category, since they would have been excluded from the scope of the indemnity by the general words. 

Thus, in order to construe the provision consistently with business common sense, Tomlinson LJ held that the expression “in relation to this Agreement” should be read as meaning in this context “in relation to the performance of this Agreement”, such that it did not extend to losses suffered in consequence of a refusal to perform or to be bound by the agreement.  That construction, Tomlinson LJ said, was “an attempt to give effect to the presumption that parties do not lightly abandon a remedy for breach of contract afforded them by the general law”.  (Kudos Catering (UK) Ltd v Manchester Central Convention Complex [2013] EWCA Civ 38 (7 February 2013) – to read the judgment in full, click here).

Technology

Government finalises agreement for unified patent court to be based in London.

Business Secretary Vince Cable has attended a signing ceremony in Brussels to finalise the deal for a new patent court to be based in London.  The new court and patent system creates a one-stop-shop for companies wanting to protect their business ideas in Europe and will bring at least £200 million to the economy each year, the Government says.

The agreement was negotiated last year and means that British companies looking to defend or enforce their patents across Europe will only need to go to one court once, instead of fighting their case in each European country.  The new court will be up and running from 2015.  The Government says that it will offer “significant savings for businesses and is good news for job creation in the legal services sector across the country”.

Commenting on the agreement, Mr Cable said: “The decision that London should host this new court shows not only the confidence in our legal sector but also the strength of the UK’s intellectual property regime. …The agreement will help our inventors who can in future spend more time on research and development, producing new ideas and less time filling in forms and defending their patents in court”.

The single patent package also guarantees a one-stop-shop for companies registering new business ideas in the EU.  According to the Government, with a new single patent, businesses will make savings of up to £20,000 per patent in translation costs alone and many saved hours of form filling.  To read the Government’s press release in full, click here.

European Commission consults on proposal for revised competition regime for technology transfer agreements.

The Commission is inviting comments on a proposal for new competition rules for the assessment of technology transfer agreements.  Technology transfer agreements are licensing agreements through which a licensor permits a licensee to exploit patents, know-how or software for the production of goods and services. 

The proposal aims to update the current regime in order to strengthen incentives for research and innovation, facilitate the diffusion of intellectual property and stimulate competition.  The Commission will adopt a new regime before April 2014.

The current regime consists of two instruments.  The block exemption regulation creates a so-called “safe harbour” for certain unproblematic agreements that are deemed to be compatible with EU rules, and Commission Guidelines provide guidance on the assessment of technology transfer agreements under EU competition rules.  Based on these Guidelines, companies can assess whether the agreements they conclude are anticompetitive and could infringe Article 101 TFEU.

The Commission’s proposed changes are a result of responses received to a public consultation held in December 2011.  In particular, the Commission proposes changing the rule that agreements or clauses granting the licensor the right to terminate an agreement if a licensee challenges the validity of the IPR are automatically exempt.  Similarly, obligations on the licensee to license back to the licensor improvements made by the licensee would also no longer be automatically exempted.  These types of agreements or clauses would instead have to be assessed on a case-by-case basis as they might stifle competition or innovation. The Commission also proposes updating the Guidelines, in particular to include new provisions on “patent pools”, i.e. multilateral patent licensing agreements.

The consultation is open until 17 May 2013.  To read the press release in full and for links to the consultation documentation, click here.

Ofcom announces winners of 4G spectrum auction.

After more than 50 rounds of bidding, Everything Everywhere Ltd, Hutchison 3G UK Ltd, Niche Spectrum Ventures Ltd (a subsidiary of BT Group plc), Telefónica UK Ltd and Vodafone Ltd have all won spectrum.  “This is suitable for rolling out new superfast mobile broadband services to consumers and to small and large businesses across the UK”,Ofcom says.

Ofcom says that the auction achieved its purpose of “promoting strong competition in the 4G mobile market”.  This is expected to lead to faster mobile broadband speeds, lower prices, greater innovation, new investment and better coverage, it says.  Almost the whole UK population will be able to receive 4G mobile services by the end of 2017 at the latest.

A total of 250 MHz of spectrum was auctioned in two separate bands: 800 MHz and 2.6 GHz.  This is equivalent to two-thirds of the radio frequencies currently used by wireless devices such as tablets, smartphones and laptops.

The lower-frequency 800 MHz band was part of the “digital dividend” freed up when analogue terrestrial TV was switched off and is ideal for widespread mobile coverage.  The higher-frequency 2.6 GHz band is ideal for delivering the capacity needed for faster speeds.  The availability of the two bands will allow 4G networks to achieve widespread coverage as well as offering capacity to cope with significant demand in urban centres.

Ofcom attached a coverage obligation to one of the 800 MHz lots of spectrum.  The winner of this lot was Telefónica UK Ltd.  This operator is obliged to provide a mobile broadband service for indoor reception to at least 98% of the UK population (expected to cover at least 99% when outdoors) and at least 95% of the population of each of the UK nations by the end of 2017 at the latest.

While the main part of the auction has concluded, there is a final stage in the process to determine where in the 800 MHz and 2.6 GHz bands each winning bidder’s new spectrum will be located.  Bidding in this final stage will take place shortly.

Following that stage, and once bidders have paid their full licence fees, Ofcom will grant licences to the winners to use the spectrum.  Operators will then be able to start rolling out their networks, with consumer services expected in spring or early summer 2013.

Ofcom says that by 2030, demand for mobile data could be 80 times higher than today.  To help meet this demand and avert a possible “capacity crunch”, more mobile spectrum is needed over the long term, together with new technologies to make mobile broadband more efficient.  Accordingly, Ofcom is planning to support the release of further spectrum for possible future 5G mobile services.  To read Ofcom’s press release in full, click here.

European Copyright Society says hyperlinking to copyright content is not “communication to the public” of that work and is therefore not infringement.

The European Copyright Society (ECS) was founded in January 2012 with the aim of creating a platform for critical and independent scholarly thinking on European Copyright Law.  Its members are renowned scholars and academics from various European countries, seeking to promote their views in the public interest. 

The ECS has published its views on the issues concerning hyperlinks and copyright infringement that are currently before the Court of Justice of the European Union in Case C-466/12 Svensson.  In that case the Swedish court has asked the CJEU whether, if anyone other than the holder of copyright in a certain work supplies a “clickable” link to the work on his website, that would constitute communication to the public within the meaning of Article 3(1) of the Copyright Directive (2001/29/EC). 

The view of the ECS is that “hyperlinking in general should be regarded as an activity that is not covered by the right to communicate the work to the public embodied in Article 3 of Directive 2001/29”.  The answer to the Swedish court’s question is therefore “no”.  The ECS gives three reasons for this conclusion:

a)       hyperlinks are not “communications” because establishing a hyperlink does not amount to “transmission” of a work, and such transmission is a pre- requisite for “communication”;

b)       even if transmission is not necessary for there to be a “communication”, the rights of the copyright owner apply only to communication to the public “of the work”, and whatever a hyperlink provides, it is not “of a work”; and

c)       even if a hyperlink is regarded as a communication of a work, it is not to a “new public”.

The ECS said: “Clearly, hyperlinking involves some sort of act – an intervention.  But it is not, for that reason alone, an act of communication.  This is because there is no transmission.  The act of communication rather is to be understood as equivalent to electronic “transmission” of the work, or placing the work into an electronic network or system from which it can be accessed.  This is because hyperlinks do not transmit a work, (to which they link) they merely provide the viewer with information as to the location of a page that the user can choose to access or not.  There is thus no communication of the work”.

If the CJEU does, however, take the view that a transmission is not required for there to be a communication, “providing a hyperlink is not an intervention which gives access to the work or a communication of the work.  As we have explained, a hyperlink is a location tool, allowing a user to find where a work is”, the ECS said.  Therefore, the CJEU should still refrain from saying that it amounts to infringement.  After all, the ECS said, the creation of a hyperlink does not communicate the work because, in many circumstances, works can be removed from the internet while the hyperlinks remain intact.

Further, the ECS said, even if a hyperlinker is said to communicate a work, because it “intervenes to give access”, it cannot be the case that by so doing the person communicates the work “to the public” because the work is not communicated to a “new public”.  For the public to be regarded as “new”, the ECS said, consideration is required of the expectations of the copyright owner and whether the public could access the work without the intervention of the third party.  In the ECS’ view the public should not be regarded as “new” for two reasons:

  1. material posted on the internet can be accessed from anywhere and can be located using a range of search tools.  Therefore, “the copyright holder who authorises or permits such making available must be assumed to contemplate access to the work from anywhere”, the ECS said.  The creation of a hyperlink does not add to the public, as the targeted public is universal; and
  2. adding a hyperlink does not give any additional access to users that they would not have had in the absence of the hyperlink.  “The hyperlink will merely draw the potential user’s attention to the existence of the material and provide an easy-to-use tool for requesting the material to be sent”, the ECS said. 

For a link to the ECS’ full analysis, click here.

European Network and Information Security Agency could be given new powers to assist battle against cybercrime.

The European Parliament says that the EU’s battle against cybercrime is set to receive a boost after the European Parliament’s Industry and Research Committee approved plans to upgrade the mandate of ENISA, the European agency dedicated to improving information security.  On 20 February 2013 the Committee voted in favour of extending its mandate for an additional seven years, including giving it additional tasks.

Under the proposal to modernise the agency, ENISA will become a key player in the fight against cybercrime, responsible for coordinating the efforts of law enforcement bodies and privacy protection authorities.  Among other tasks, ENISA will help the Commission with policy development and facilitate cooperation among Member States, and assist the EU in efforts to collect, analyse and disseminate network and information security data while promoting the use of risk management and security good practices and standards.  The new mandate will also involve a change in management, streamlining of procedures and a gradual increase of resources.  To read the European Parliament’s press release in full, click here.

Data Protection

Information Commissioner’s Office publishes consultation on data protection and the press Code of Practice.

In considering the impact of the current framework of data protection law on the press Lord Justice Leveson recommended that the ICO prepare and issue comprehensive good practice guidelines and advice on appropriate principles and standards to be observed by the press in the processing of personal data.

The ICO therefore proposes to issue a Code of Practice under s 51 of the Data Protection Act 1998 in relation to the law as it currently stands.

The ICO says that: “This short public consultation on the likely scope and content of the proposed ICO code of practice is an important first step in ensuring our stakeholders have an opportunity to let us know their views and engage in constructive dialogue to develop a common understanding of how data protection legislation applies to the media”.  

This consultation will be followed by a full public consultation on the Code itself.  The closing data of this consultation is 15 March 2013.  For a link to the consultation documentation, click here.

European Parliament’s Industry, Research and Energy committee backs proposed European data protection reforms.

The European Commission has welcomed the adoption of an opinion by the European Parliament’s Industry, Research and Energy Committee on the Commission’s proposals to reform the EU’s data protection rules.  The Commission says that the vote on the Committee’s opinion is “the latest step towards a swift adoption of the proposed legislation”.

The Committee’s opinion on the draft general Data Protection Regulation will now be submitted to the Civil Liberties, Justice and Home Affairs Committee, which will consolidate all the amendments submitted so far and vote on its own report at the end of April.

The ITRE Committee backed the main provisions of the Commission’s data protection reform:

  • the need to replace the current 1995 Data Protection Directive with a directly applicable Regulation that covers
    the processing of personal data.  A single set of rules on data protection, valid across the EU will remove unnecessary administrative requirements for companies and can save businesses around €2.3 billion a year;
  • the need to have a one-stop shop for companies that operate in several EU countries.  The Commission’s proposal is cutting red tape by introducing a one-stop shop for businesses to deal with regulators.  In the future, companies will only have to deal with the data protection authorities in the EU country in which they have their main establishment;
  • the need for a consistency mechanism that will ensure uniform application of the EU rules.  The Commission is putting an end to regulatory fragmentation and inconsistent application of the rules to help accelerate the Digital Single Market; and
  • the need to pay special attention to SMEs, which are the backbone of Europe’s economy (99% of all European businesses are SMEs).  The Commission’s proposal already provides for a number of exemptions for SMEs (below 250 employees) including an exemption from the need to appoint a data protection officer or the duty to put together documentation on their data processing activities.  The ITRE Committee voted to expand this approach.

The Commission says that it will continue to work very closely with the European Parliament and with the Council to support the co-legislators in their endeavour to achieve a political agreement on the data protection reform by the end of the Irish Presidency.  The next discussion by Ministers of the proposed data protection rules is set for the upcoming Justice Council on 8 March 2013.  To read the Commission’s press release in full and for a link to the opinion, click here.

Broadcasting

Ofcom consults on proposals regarding ITV, STV, UTV and Channel 5 TV broadcast licences.

ITV provides the Channel 3 service in England, Wales and parts of Scotland, STV covers northern and central Scotland and UTV serves viewers in Northern Ireland.  The Channel 5 licence covers all of the UK.

Ofcom is now working towards issuing new ten-year licences ahead of the expiry of the current licences at the end of 2014.  Accordingly, it has published three separate consultations.  These are on the programming obligations in the licences; the proposed creation of a separate Wales licence from the Wales and West licence currently held by ITV; and the methodology by which Ofcom will determine the financial terms on which the licences will be renewed.

Public service broadcasters must meet certain programming obligations, such as the provision of news and current affairs programming and the amount of original and independent productions.  The consultation invites views on these programming obligations in the Channel 3 and Channel 5 licences.

The proposals are to maintain the existing set of obligations for the Channel 3 licensees, subject to the following changes:

  • for the English regional licences currently held by ITV, an increase in the number of regions in England with dedicated news broadcasts from seven to 14, with the cost offset by reducing the amount of regional content required in each licence;
  • for the Border licence currently held by ITV, two alternative proposals to increase the amount of regional news and current affairs programming in the Border area, aimed at enhancing the coverage of Scottish issues for viewers north of the border;
  • for the Northern Ireland licence held by UTV, a request by UTV to reduce its regional non-news obligation by half an hour a week to bring the regional programming obligations in line with those in Wales and central and northern Scotland; and
  • no changes are planned to the obligations for the licensees for Scotland (excluding Border) and Wales.

Ofcom is proposing to maintain the existing programming obligations in the Channel 5 licence.

Ofcom proposes to create a separate Channel 3 licence for Wales by redrawing the boundaries of ITV’s Wales and West licence.  Under this proposal, the remaining area covered by that licence, Bristol, Somerset, parts of Wiltshire and Gloucestershire, would then be served by the South West of England licence currently held by ITV.

The two regions within the Wales and West of England licence already receive separate regional programming and there are separate licence obligations in relation to each.  Ofcom is proposing to maintain the current level of regional programming which is required for Wales in the new Wales only licence.

The Communications Act 2003 requires that Ofcom must determine the financial terms on which the licences will be renewed.  The consultation proposes a methodology to calculate those financial terms.  For a link to the consultation documentation, click here.

Ofcom considers matter of broadcast of most offensive language during pre-watershed live coverage of the Abu Dhabi Grand Prix resolved thanks to swift remedial action from BBC and Sky Sports F1.

As part of a live broadcast feed provided to various broadcasters by Formula One Management (FOM), the presenter David Coulthard interviewed one of the winning drivers, Sebastian Vettel, at approximately 3.05pm.  Vettel said “I think would we have started from third it would have been a different race but, yeah, it was obviously a chance to f*ck it up and we didn’t do that”.  David Coulthard then addressed the audience saying, “OK, well, Sebastian, thank you for those words, and we should just remind our audience that he is speaking in his second language.  We apologise for the choice of words that you had”.

The post-race interview was transmitted on various channels carrying the race, including Sky Sports F1 and BBC1 and both said its programme teams had taken steps to properly acknowledge and promptly apologise for the incident. 

Ofcom acknowledged that a few minutes after the interview, both the BBC’s and Sky’s presenters issued an apology and also noted that both broadcasters had removed the material from any repeats as soon as practicable.  This swift action, in addition to the on-air apology given by David Coulthard, meant that, although there was a clear breach of rule 1.14 of the Broadcasting Code – the most offensive language must not be broadcast before the watershed – Ofcom considered the matter resolved.  It is worth noting that Ofcom also took into consideration the fact that both broadcasters took further action in the form of issuing guidance to production staff about the matter in the case of Sky Sports F1 and, in the case of the BBC, a direct discussion with FOM to help avoid similar incidents in the future.  To read adjudications on Live Formula One: Abu Dhabi Grand Prix (BBC1) and Abu Dhabi Grand Prix (Sky Sports F1) published in issue 224 of the Broadcast Bulletin (18 February 2013), click here.

Prize Draws, Promotions and Competitions

ASA finds Debenhams’ email voucher promotion unfair after Daily Mail pulls voucher space.

An email from Debenhams, sent on 8 November 2012, stated “In association with the Daily Mail. Collect your £5* and £10* voucher from the Daily Mail and also receive 20% OFF at Debenhams.com”.  At the bottom of the email, terms and conditions stated “*Daily Mail offer: 1. To qualify for the discount, readers must redeem 1 voucher from the Daily Mail between from [sic] Monday 5th November and Saturday 10th November 2012”.

The vouchers were not, however, printed on 8, 9 or 10 November because of an editorial decision, although a promotional code was created and uploaded to the Daily Mail website which enabled consumers to take advantage of the offer. Debenhams explained that, usually, when running such promotions they stated that their ability to publish the voucher was subject to editorial control, but that had unfortunately not been stated in the email on this occasion.  

The CAP Code states that “Promoters are responsible for all aspects and stages of their promotions” and so, even if such a qualification had appeared in the email, the ASA said that it would not counter the fact that a number of consumers could purchase a paper hoping to obtain a voucher and would fail to do so.  Consumers would have expected the voucher to be available on the relevant days and would not have realised it was missing from the paper until they had purchased a copy.  Nor would they necessarily have been aware that the relevant offer code was available on the Daily Mail website or think of checking the site once they knew that the voucher had not appeared in the paper.  Because, contrary to the claim in the ad, the voucher had not appeared in the printed version of the Daily Mail on 8, 9 and 10 November, the email was misleading.  The email therefore breached CAP Code rules 3.1, 3.3 (Misleading advertising), 3.9 (Qualification), 8.1, 8.2 (Sales promotions) 8.14 (Administration) and 8.17 (Significant Conditions for Promotions).  To read ASA Adjudication on Debenhams Retail plc (20 February 2013), click here.

Publishing

European Parliament calls for annual EU monitoring of Member States’ media laws.

The European Parliament Civil Liberties Committee has adopted a resolution on media freedom, saying that: “investigative journalism should be supported in the EU and media independence protected from political and economic pressures”.  MEPs voted, 47 in favour and six against, for an annual EU-wide monitoring of media laws, together with measures to protect media freedom and to help prevent excessive media concentration.

The media industry is the “public watchdog” in a democracy, MEPs said, calling on the EU and its Member States to “respect and protect the fundamental right to freedom of expression and freedom of the media”.  This right is not restricted to the traditional media, the resolution said, but also applies to social media and other new media.

Changes in media laws and Government interference should be monitored yearly by the European Commission, the Fundamental Rights Agency and/or the European University Institute Centre for Media Pluralism and Media Freedom, the Committee proposed.  Further, the findings should be published in an annual report and followed up with proposals for action.  “A mechanism of monitoring and reporting on the full respect of media freedom and pluralism across the EU countries should become a regular democratic exercise”, said Renate Weber (ALDE, RO) who drafted the resolution.

The Committee also said that it wants to “safeguard journalists’ independence from the internal pressures of publishers or owners and the external pressures of political or economic lobbies”.  For editors and journalists, editorial charters or codes of conduct are “crucial to independence”, the Committee said, as they prevent owners, governments or others from interfering with news content.  The resolution also urges the EU and its Member States to “support investigative journalism, as it monitors democracy and uncovers criminal offences”.

Ethical journalism should also be promoted in the EU, the Committee said, but media regulatory bodies should always be independent and created by the media sector itself.  MEPs therefore called on the Commission to propose a legal instrument whereby Member States would ensure “the establishment by the media sector of an independent media regulatory authority”.  Also, the media sector itself must develop professional standards and ethical codes.

These standards and codes should “include the obligation to indicate a difference between facts and opinions in reporting, the necessity of accuracy, impartiality and objectivity, respect for people’s privacy, the duty to correct misinformation and the right of reply”, the resolution states.  Member States should also provide legal guarantees to help journalists protect the confidentiality of sources and whistle-blowers.

MEPs acknowledged that the EU has the power to take legislative measures to guarantee and protect media freedom, but said that non-legislative initiatives, such as monitoring, self-regulation and codes of conduct, were preferable given that some of the most striking threats to media freedom in some member states come from newly-adopted laws.

The resolution also said that public media chiefs, management boards, media councils and regulatory bodies should be selected on merit and experience, instead of political and partisan criteria.  MEPs called on Member States to establish guarantees to safeguard their independence from political influence.

The Committee also called for appropriate funding for public service media to guarantee their political and economic independence.  Public and private media should “play their respective roles in a genuinely balanced dual system”, MEPs concluded.

The Commission and EU Member States should intervene, however, where excessive concentration of the media threatens pluralism and independence.  Further, details on the ultimate owners of media outlets should be made public, e.g. in a single European register, to enable citizens to check on the interests behind their media.  To read the European Parliament’s press release in full, click here.

Press Complaints Commission upholds complaint by Cleveland Police against Daily Mirror, which had named a victim of sexual assault.

Cleveland Police complained to the PCC on behalf of a woman who had been identified as a victim of sexual assault in an article published in the Daily Mirror in 2011 in breach of Clause 11 (Victims of sexual assault) of the Editors’ Code of Practice.

The article reported a man’s initial appearance before Teesside Magistrates Court at which he pleaded not guilty to charges that he had sexually assaulted two women.  The complainant, one of the alleged victims, had been named in the article, causing her significant distress.  The newspaper’s publisher had pleaded guilty to naming a victim of sexual assault in breach of the Sexual Offences (Amendment) Act 1992 in connection with the incident and had been fined.  The PCC issued its ruling on the matter following the conclusion of those proceedings.

The newspaper accepted from the outset of the complaint that it was at fault.  The editor of the newspaper apologised to the complainant in a private letter and the newspaper offered to publish an anonymous public apology to the complainant in addition.  The newspaper said it had launched a thorough investigation into how the complainant’s name came to be published and intended to improve its training of its journalist to prevent such breaches in future.

Under Clause 11 of the Editors’ Code, “the press must not identify victims of sexual assault or publish material likely to contribute to such identification unless there is adequate justification and they are legally free to do so”.  The PCC says that the terms of this clause are tightly drawn in order to protect extremely vulnerable individuals from intrusion and to ensure that victims of sexual assault are not deterred from reporting such crimes by a fear of unwanted publicity.

Although the newspaper had acted properly in accepting at the first opportunity that it had breached the Code, this was “an alarming case”, the PCC said, in which an individual who ought to have benefited from proper protection had instead been identified by name.

Given the serious nature of this case, the PCC resolved to review the terms and outcome of the newspaper’s investigation into the incident.  The newspaper subsequently confirmed that the matter had been raised formally with the editorial and legal staff concerned to understand how the breach of the Code had occurred and to specify the steps that should be taken in future to ensure that it would not be repeated.  The newspaper also explained that the reporter concerned had undertaken training on the relevant legal requirements and the importance of maintaining the anonymity of victims in such cases. The PCC acknowledged the measures that had been taken and emphasised that the newspaper should continue to keep its processes under review to ensure that such an error would not recur.  To read PCC adjudication on Cleveland Police v Daily Mirror (19 February 2013), click here.

Press Complaints Commission upholds complaint against regional newspaper for undercover report on direct-selling scheme.

The PCC has upheld a complaint under Clause 10 (Clandestine devices and subterfuge) of the Editors’ Code of Practice against the Kent and Sussex Courier, after it published an article headlined “Saleswoman who targeted doctor’s patients and poor is exposed”.

The complainant was a receptionist in a local doctor’s surgery, who also worked in the “multi level marketing sector” selling “wellness products”.  Having read an article in the newspaper about a woman who was experiencing financial hardship, she had approached the newspaper, via a representative, to suggest that she might be able to assist the woman with a new source of income.  The woman had agreed to meet the complainant, but (unknown to the complainant), she was accompanied by an undercover reporter from the newspaper posing as her partner.  At the meeting, the complainant, who was unaware she was being recorded, revealed that she had recommended her products to the surgery’s patients.

The complainant argued that the use of subterfuge was unjustified: she had intended to help the woman, and the newspaper had made no attempt to investigate the issue through standard techniques.  In its defence, the newspaper said it had been concerned about the woman being introduced to what it suspected was a scheme requiring her to commit a considerable amount of up-front funding.  It said it wanted to know whether the complainant was “targeting” vulnerable individuals, and had decided that it could only investigate further by employing subterfuge.

The PCC acknowledged that the newspaper had acted with “praiseworthy” motives in trying to protect a vulnerable individual.  However, the Code requires that the use of subterfuge can generally only be justified in the public interest and then only when the material cannot be obtained by other means.  It emphasised that a decision to use subterfuge must be made on the basis of evidence rather than speculation.  Although the material uncovered was clearly in the public interest, at the time at which the subterfuge was undertaken, there was no evidence that the complainant was involved in illegal or improper activity.  The complaint was upheld on this basis.  To read PCC adjudication on Nicki McLellan v Kent and Sussex Courier (22 February 2013), click here.

Court of Appeal considers defamation online finding that, potentially, online platforms might be “publishers” at common law and therefore liable.

The Claimant, Payam Tamiz, claimed that he was defamed by comments appearing on a blog hosted by Blogger.com (operated by Google Inc).  He was unable to identify the anonymous commentators so instead claimed that Google was liable as publisher of the blog.  He was granted permission to serve a claim on Google in California.  The decision granting him permission to serve out of the jurisdiction was set aside by Mr Justice Eady at first instance.  Tamiz appealed and the Court of Appeal upheld Eady J’s judgment and dismissed his appeal.

The Court of Appeal held that Tamiz’ claim was an abuse of process following Dow Jones & Co Inc v Jameel [2005] EWCA Civ 75 (03 February 2005).  The “game would not be worth the candle” and the period between notification of the complaint and removal of the offending blog was so short as to give rise to potential liability on the part of Google only for a very limited period, the court said.

The Court of Appeal could not agree entirely with Eady J’s ruling and ruled obiter that Blogger.com was arguably a publisher at common law of the offending blogs and that s.1 of the Defamation Act 1996 did not provide an unassailable defence.

Blogger.com was akin to a gigantic notice board under Google Inc’s control and the case therefore had similarities with the case of Byrne v Deane [1937] 1 KB 818 (which concerned a golf club’s liability for a statement posted on its noticeboard).  Following notification, it was arguable that Google had “reason to believe that its continued hosting of the material in question caused or contributed to the publication of a defamatory statement” robbing it of a s.1 defence.

The Court of Appeal didn’t go on to rule on whether Regulation 19 of the Electronic Commerce (EC Directive) Regulations 2002 provided Google Inc with a defence.  The effect of Regulation 19 is that there is no liability without actual knowledge of unlawful activity.  A defamatory statement is only unlawful if it cannot be defended.  The law therefore remains unchanged on that point.  (Tamiz v Google [2013] EWCA Civ 68 (14 February 2013) – to read the judgment in full, click here).

Film & TV

European Commissioner Neelie Kroes says “release windows” for films prevent the sector from getting digital benefits.

In a blog post on her website, Ms Kroes said that rigid release windows restrict flexibility.  Release windows set out when films can be released in cinemas, on DVD and online.  Such windows can be based on regulation, public funding conditions, industry practice or individual negotiations.  In Ms Kroes’ view, “while such “exclusive” periods may be important to finance some films, or get the most out of them, rigid and uniform rules can make it harder for the sector to capture digital benefits”.

Ms Kroes said that the lack of flexibility troubled her because each outlet has its own strength and each can respond to different consumer needs.  Some prefer the cinema, whilst others prefer digital channels.  In some cases, the lack of a digital channel will mean that some people will not see the film at all or recommend it to their friends.  This can also lead to online piracy.  The film industry therefore misses out, Ms Kroes said.

Some films might be better served by a first exclusive cinema release, such as blockbusters with a big audience appeal, but others might do better by going online earlier, Ms Kroes said.  The lower distribution costs online may especially suit low-budget, niche films, which have limited access to cinemas.  

Social media can give new films “a huge publicity “buzz””, Ms Kroes said.  Further, there is already evidence that experimenting with release windows boosts all sales and paves the way to cinema success.  In addition, digital channels offer an important way to shore up home-viewing sales at a time when DVD sales are declining.  The US has seen big progress by releasing films earlier on VoD to meet changed consumer expectations.  “And maybe there’s a new way to finance production here: like through TV sequencing, or even by direct investment from online movie sites”, Ms Kroes said.

In short, Ms Kroes said, “the opportunities of digital are huge”.  To seize those opportunities, all parts of the film ecosystem need to be able to experiment: “those who stick their heads in the sand will miss out”, she said.

Ms Kroes made it clear that she did not want to impose anything on the industry, such as simultaneous or near-simultaneous release, or shorter windows.   However, she said, “I know that many in the industry are just as frustrated as I am by the existing lack of flexibility, the opportunities we are missing, and the damage to the goals of cinema overall”.  In Ms Kroes’ view, the best way to make the most of the film industry “is with the flexibility to use new, exciting digital channels to the full”.  To read Ms Kroes’ blog post in full, click here.

Corporate

Supreme Court dismisses appeal to “pierce the corporate veil” and find directors parties to the company’s contracts.

In 2007 the claimant, VTB Capital plc, an English incorporated bank, entered into agreements with Russagroprom LLC (RAP), a Russian company.  Under the agreements, VTB loaned US$225,050,000 to RAP, primarily to enable RAP to buy six Russian dairy companies and three associated companies from Nutritek International Corp.  In 2008, RAP defaulted on the loan.  VTB claimed that it was induced in London to enter into the agreements by misrepresentations made by Nutritek.  Mr Konstantin Malofeev, a Russian businessman resident in Moscow, was said to be the ultimate owner and controller of Nutritek, Marshall Capital Holdings Ltd (MCH), and Marshall Capital LLC (Marcap Moscow).  VTB claimed that MCH, Marcap Moscow, and Mr Malofeev were jointly and severally liable for those alleged misrepresentations.

VTB was granted permission to serve proceedings out of the jurisdiction.  After being served, Nutritek, MCH and Mr Malofeev applied to Mr Justice Arnold for the service to be set aside, largely because England was not considered to be the appropriate forum.  In addition to opposing such application, VTB sought to amend its pleaded case to contend that RAP’s corporate veil should be pierced with the effect that Mr Malofeev, MCH and Marcap Moscow would be treated as jointly and severally liable with RAP for breaches of, and/or otherwise subject to remedies to enforce, two of the agreements.  Arnold J found against VTB on both issues, and, while holding that he had gone wrong in certain respects on the first of those issues, the Court of Appeal dismissed VTB’s appeal.  VTB appealed on both issues to the Supreme Court, asking whether the permission granted to VTB to serve the proceedings out of the jurisdiction should remain set aside; and whether VTB should be allowed to amend its pleaded case to include the claim based on piercing the corporate veil.

The Supreme Court dismissed VTB’s appeal.  On the jurisdiction point, it found that there were no grounds which justified interfering with the judge’s decision or, if the Court of Appeal was entitled to re-exercise the power, interfering with the Court of Appeal’s decision.  The issues, oral and documentary evidence were focused on Russian witnesses and overwhelmingly on matters that happened in and concerned Russia, the court said.

As for “piercing the corporate veil” the Supreme Court said that VTB’s proposed case did not give rise to arguable grounds for contending that the jurisdiction to pierce the corporate veil could be invoked.  This was an interlocutory appeal, it said, and so it was unnecessary and inappropriate to resolve the issue of whether, unless any statute relied on in the particular case expressly or impliedly provided otherwise, the court was entitled to pierce the veil of incorporation.  On the assumption that the court could pierce the corporate veil on appropriate facts, VTB’s case involved an extension to the circumstances where it has traditionally been held that the corporate veil can be pierced.  Such an extension would mean that the person controlling the company could be held liable as if he had been a co-contracting party with the company concerned to a contract where the company was a party but he was not, and where neither he nor any of the contracting parties intended him to be.   That would be contrary to authority and contrary to principle.  Moreover, the extension was not needed, the court said, to enable VTB to seek redress from Mr Malofeev: if VTB manages to establish that it was induced to enter into the agreements by the fraudulent statements which he is alleged to have made, then Mr Malofeev will be liable to compensate VTB in any event. (VTB Capital v Nutritek International Corp [2013] UKSC 5 (6 February 2013) – to read the judgment in full, click here).   

Advertising

Advertising Standards Authority publishes advice on using animals in adverts.

The ASA says that every year it receives a number of complaints about ads featuring an animal.  While advertisers are perfectly free to use or depict animals in ads, they should make sure that they do not inadvertently encourage or condone behaviour that might result in their poor treatment, the ASA says.

Advertisers using animals in their ads are also expected to have a vet on set during production to make sure the animals used are safe. 

The ASA says that one of the primary concerns that the public raises is when an animal appears to be in distress.  An example of this was a Volkswagen ad that featured a dog singing confidently in a car and then shivering when outside the vehicle.  The ASA received 733 complaints from viewers who were concerned about the dog’s welfare and felt the ad condoned animal cruelty.  The ASA acknowledged that not everybody was comfortable with the idea of a trained performing animal being used in the ad, but the advertiser was able to prove that a vet had been present during filming and the dog had not been harmed.  The ASA also noted that a singing dog was fantastical and therefore unlikely to encourage viewers to abuse animals.  The advertising rules state clearly that animals must not be harmed or distressed as a result of producing an ad.  After careful consideration and thought the ASA did not find that this ad was in breach of the rules.

Another common concern the ASA receives is that ads might encourage people to copy behaviour that could be harmful to an animal.  A recent Morrison’s ad featured a young boy giving Christmas pudding to a dog.  It prompted 234 complaints from members of the public, vets, and others who worked with dogs who were concerned that people would in turn feed their dogs Christmas pudding, which is known to contain ingredients that are potentially harmful to dogs.  In that case, the ASA decided that the ad was unlikely to result in harm to animals or cause people to copy the behaviour seen because the ad depicted the dog being fed Christmas pudding in an unfavourable light.

The ASA concludes that using animals in ads is “a tried and tested way of appealing to consumers”.  However, advertisers do have a responsibility to ensure they look after an animal’s welfare and that includes not depicting it in a way that may result in its harm or encourage people to mistreat other animals.  To read the advice in full, click here.

Committees of Advertising Practice announce changes to price comparison rules and to rules governing price claims inclusive or exclusive of VAT.

Previously, advertisers were required to compare prices with a competitor for an identical or substantially equivalent product.  For example, an advertisement could not compare a retail advertiser’s own-branded product against premium branded products sold by their retail competitors.  According to CAP, that requirement not only prevented certain price comparison claims that may have been of benefit to consumers, but also appeared to go beyond the minimum requirements for comparative advertising set out in law.

Following a full public consultation, CAP and BCAP have amended rule 3.39 of the UK Advertising Codes to remove the requirement that advertisers must compare identical or substantially equivalent products.  This allows advertisers to compare products that may not be identical, but nonetheless meet the same need or intended purpose (rule 3.34).  An advertisement can now compare the price of a non-branded product with a competitor’s price for a premium branded product.  However, it remains the case that advertisers must make the basis of their comparison clear (rule 3.39).

CAP and BCAP have also amended rule 3.35 to make clear that advertisements may objectively compare one or more features, which may include price. 

CAP says that the change to the rules will benefit both consumers and advertisers by allowing a broader range of comparative claims to be made, while retaining robust protection in the Codes to prevent misleading advertising.

The amended rules take immediate effect.

CAP and BCAP have also announced changes to the rules governing the use of price claims that are inclusive or exclusive of VAT.  Previously, VAT-exclusive price claims could only be used when advertisers could be sure that most or all of the audience paid no VAT or could recover it.  However, the rule did not reflect the fact that advertisers could clearly address claims to business consumers without confusing general consumers.  In addition, it was difficult, if not impossible, for advertisers to be confident that their advertisements would only be seen by those who did not pay VAT or could recover VAT, potentially discouraging them from making legitimate VAT-exclusive price claims.

In light of this, the Advertising Codes have been changed to allow advertisers to make VAT-exclusive price claims, provided the claims are clearly addressed to those that pay no VAT or can recover it.  For example, an advertiser could state “business price £X, excl VAT at 20%”, or present two prices, one for business customers and one for the public.  It remains the case that when using VAT-exclusive prices, advertisers must prominently state the amount or rate of VAT payable.

The amended rules take immediate effect.  To read CAP’s press release in full and for a link to the amended Codes, click here.

Topics