Michelmores has been recognised with a Lifetime Achievement Award at The C Group’s annual awards dinner on Friday 2 October 2015 – for its continued support of the Devon-based charity.

The C Group, founded in 2008, provides ongoing support to Royal Marines in need across the UK – including those who have been injured, former Royal Marines resettling into civilian life and families of both serving and former Royal Marines.

One of three awards presented on the night, the Lifetime Achievement Award recognises the individual or business who has made the biggest contribution to the C Group in recent times.

Michelmores’ support over the years has included helping individuals with start-ups, business advice and banking advice.  Most recently, the firm has been involved in a house building project for a wheelchair-bound royal marine, including providing legal advice on the site acquisition and build.

Steve James, Chairman of The C Group said:

“Michelmores has supported us from the outset − firstly advising the charity on its formation and since then, has provided specialist advice as we have evolved.

“They have held events not only to raise funds for the charity but also to raise awareness. However, most importantly they have advised a steady stream of Royal Marines in need, on such diverse matters from business start-ups to bankruptcy – the majority of this work has been undertaken pro bono.

“In the opinion of the charity, this firm is a heavyweight in every respect not only in terms of the advice they provide but in their CSR credentials, which are a beacon to all other businesses.”

Malcolm Dickinson, Managing Partner at Michelmores said:

“We’re so proud to receive such an accolade and feel privileged to have been involved with The C Group since the charity was founded.

The C Group undertakes such important work supporting Royal Marines in need right across the country, and we look forward supporting this great charity for many more years to come.”

Before starting my training contract at Michelmores in 2014, I attended a fantastic conference held by the Junior Lawyers Division (JLD) and was so impressed, that when the opportunity arose, I jumped at the chance to join the Committee of The Devon & Somerset JLD.

Initially I was slightly concerned about balancing JLD obligations with my existing workload as a trainee. However, I have found Michelmores to be completely supportive of my JLD commitments – often actively encouraging them.

The JLD organises a wide range of events for trainees, paralegals and solicitors up to five years qualified – I always look forward to the monthly drinks socials, not least for the free nachos! Recently I attended a qualification and employment options seminar, not only did this allow me to meet other like-minded individuals, similarly daunted by the thought of what lies beyond the training contract.  It also enabled me to get a handle on how the qualification process works and areas that are expanding (or contracting as the case may be) in the legal market at the moment.

Being part of the JLD committee does require me to dedicate a considerable amount of my time, this often involves making up work time elsewhere or heading to London a few times a year at the weekend. However, it has contributed greatly to my professional development. I am the national representative of The Devon & Somerset JLD, meaning I attend national meetings in London and am effectively the voice for the South West on different issues affecting junior lawyers in the profession.

As well as getting to visit the impressive Law Society office (just over the road from our London office) in Chancery Lane, this has  greatly increased my confidence in public speaking and made me an effective team member when working to get our voice heard. Recently we have had meetings with the Solicitors Regulation Authority (SRA) on topics such as the proposed abolition of the Legal Practice Course (LPC) and also discussions to decide JLD policies on unpaid work experience and loans for further study. The Devon & Somerset JLD has provided a valuable input on these important issues.

Being part of the national Committee has given me the chance to mingle with JLD members from further afield and gain an insight into what is going on in their local areas, not to mention the fact that my business card collection has also been built up considerably! All in all, being an active member of the JLD is a great opportunity that I would thoroughly recommend anyone to get involved in.

If you would like to find out more about the Junior Lawyers Division please a visit the website: http://communities.lawsociety.org.uk/junior-lawyers or alternatively you can follow us on twitter: @DS_JLD.

The recent decision of the ECJ in the case of Boston Scientific Medizintechnik (Case C-503/13, 5 March 2015) has led some commentators to argue that the concept of what constitutes a ‘defective’ product under the Product Liability Directive (85/374/EEC) has been widened. This article considers the effect of the decision and whether its application is limited purely to the medical sector.

The preliminary ruling in Boston

The Bundesgerichtshof in Germany referred two questions to the ECJ. The producers of pacemakers and implantable cardiac defibrillators had identified, through quality control systems a potentially defective component in each device which meant that the possibility of the devices failing was 17 to 20 times greater than normal. The producers undertook to replace the devices free of charge, but the issue was who should pay for the cost of inpatient and outpatient treatment for replacement surgery. The insurers of the individuals concerned took Court action against the producers for those costs.

The questions referred to the ECJ (and as interpreted in the opinion of the Advocate General) were as follows.

1. Whether, in essence, an active implantable medical device must be regarded as defective where it belongs to a group for which the risk of failure is significantly higher than normal, or where a defect has already occurred in a significant number of products of the same model; and
2. Whether “damage caused by death or personal injuries” is included in the definition of “damage” set out at Article 1 of the Directive, for which there is strict liability.

It is the ECJ’s answer to question (1) above that has sparked particular interest outside the healthcare sector.

In summary, the ECJ found that where products belonging to the same group or forming part of the same production series have a potential defect, it is possible to classify as defective all the products in the group or series, without there being any need to show that the product in question is itself defective.

Pursuant to Article 6(1) of the Directive, “A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account.” In reaching its conclusion, the ECJ considered that the “safety which the public at large is entitled to expect”, for the purposes of Article 6(1) must be assessed by taking into account the intended purpose, the objective characteristics and properties of the product and the specific requirements of the group of users for whom the product is intended.

The concept of safety must be assessed in the context of any abnormal potential for damage that a product could cause to the person or to the property of its user. Where a product falls into this high risk category, and where it is found that products belonging to the same production series or group have a potential defect, then it is possible to classify all the products in that group or series as defective, without there being any need to show that the product in question was actually defective.

As the Advocate General noted:

“Making proof of a lack of safety subject to the actual occurrence of damage would disregard the preventative function assigned to EU legislation on the safety of products offered on the market…”

While a product may be classed as defective under Article 6(1), it is still necessary for a claimant to prove a causal relationship between the defect and the damage the claimant has suffered, under Article 4, in order to be awarded compensation. In Boston, the ECJ stated that in order to assess whether the damage suffered by patients resulting from surgery to remove and replace the devices had the requisite causal connection, it was necessary for national Courts to consider whether the operations were necessary and proportionate. In other words, to be compensated the claimants had to demonstrate that the operations were likely to avert the risk of the failure in question and there was no less damaging alternative.

The impact of the Boston decision

The Boston decision is, undoubtedly, highly fact specific. It relates to a class of products in which a user is particularly vulnerable to potentially catastrophic damage if the product fails. Similarly, the remedy in order to rectify a potential defect is an operation, which is risky, painful and may cause lasting damage to a patient. The damage suffered by the patients in Boston (in having the potential defect remedied through another operation) occurred even though the potential defect had not yet materialised.

It is therefore questionable whether the Boston decision has an application outside the healthcare sector. Some commentators have, however, suggested that other scenarios exist where the criteria in Boston could come into play and potentially defective products within the same class could be deemed ‘defective’ under Article 6(1) due to their abnormal potential to cause damage to a user if potentially defective. This could include products used by children, vehicles or safety equipment, for example. The case could have an application in a scenario where installed fire safety equipment in a person’s home is found to be potentially defective. It may then be necessary to cause damage to the fabric of the building in order to remedy the potential defect. The defect would not yet have materialised, but the home owner would have suffered loss as a result of the steps necessary to protect against the defect occurring.

The terms of the Product Liability Directive are incorporated into English law by the Consumer Protection Act 1987 (the “CPA”). The CPA mirrors the requirements of the Directive as to what constitutes a ‘defect’. We have yet to see whether the English Courts follow the approach in Boston and widen the scope of what can be categorised as a defective product. However, some recent decisions have demonstrated a willingness on the English Courts’ part (when determining whether a defect has caused the loss suffered) to find that a defective product has caused the loss, even where a claimant has not been able to identify the specific defect that has occurred.1 This could indicate that the English Courts are open to giving the principles set out in Boston a wider application outside the sector of medical implantable devices.

In the specific context of healthcare, it appears that the decision in Boston will be significant. It is not yet clear how the Court’s ruling will impact on product liability insurance policies taken out by manufacturers of medical devices. Given the potential for an increase in claims, however, it seems likely that premiums for many manufacturers will rise. Manufacturers will also need to check whether their insurance covers the costs of product replacement surgery which, following the ruling in Boston, manufacturers may now have to bear. Consumers could also potentially be affected by increased prices charged by manufacturers in order to absorb the additional costs of insurance, increased monitoring of the manufacturing process and the implementation of more rigorous internal procedures. This would be an unfortunate side effect for consumers, given that it is likely to be health insurance companies, not the patients themselves, who will bring product liability claims against producers.

1 Hufford v Samsung Electronics Limited [2014], which considered the Judgment of the Court of Appeal in Ide v ATB Sales Ltd, Lexus Financial Services (t/a Toyota Financial Services (UK) Plc) v Russell [2008]

Despite the record fines levied by US and UK regulators throughout 2015, there is no sign of prosecutions, extraditions and compensation claims slowing down as we move into the tail end of the year. With the Serious Fraud Office (SFO) securing special funding from the Treasury to pursue at least 12 others in relation to LIBOR fixing, and the case of Navinder Singh Sarao testing the mechanics of existing extradition treaties, the financial world continues to shake under ever-increasing regulatory scrutiny.

Read the full article

This article was first published in Private Client Adviser on 19 August 2015 and is reproduced by kind permission.

Is monogamy dead? The founder of Ashley Madison certainly thinks so. But is finding that your spouse has an account on a website dedicated to facilitating extramarital affairs enough to get a divorce?

‘Life is short. Have an affair.’ This is easily one of the most depressing slogans ever utilised, no? Hardly a surprise then, that there hasn’t been a great deal of sympathy flying about for the ‘morally corrupt’ members of Ashley Madison over the past few weeks, since the hacker group, Impact Team, threatened to release their personal details and thus expose their adulterous behaviour.

Ashley Madison claims to have 37 million members worldwide, statistics which have been questioned (and in some instances disproved) over recent weeks as being somewhat exaggerated.

Monogamy is dead

Inflation of membership figures may be the site’s own attempt to assuage the consciences of its existing customers, and simultaneously attract prospective ones to join the party. Certainly such figures would seem to indicate that everyone is cheating on their spouse, thus substantiating the website founder’s claim that ‘monogamy is dead’.

Some studies on this subject have suggested that 60 per cent of men and 45 per cent of women will be unfaithful at some point in their marriages. These are not insignificant numbers and are fairly dispiriting even when you take into account the range of possibilities in between the one-off lapse of judgment, and the full blown ‘double life’ affair.

I am sure most people would assume that as a family solicitor, I should be rubbing my hands in merciless and unadulterated glee (tenuous pun intended) at the prospect of 2.4 million potential divorces looming on the horizon, if the hackers follow through with their threats – an estimate based on Ashley Madison’s claim of facilitating the extra-marital affairs of 1.2 million people in the UK.

I can’t say the link didn’t cross my mind, but just in the way I am hopeful that medical professionals don’t pray for terrible accidents, I derive no satisfaction from hearing about the end of a marriage, however it comes about.

Instead, I like to think of my role as one that is necessary as a result of the sad realities associated with the foibles of human nature; supporting people through the aftermath rather than taking pleasure in the event.

I have said before that I believe one of the most difficult aspects of being a family solicitor is having to manage your clients’ expectations in terms of how they think the law should operate, versus how it actually applies to their situation. This is most difficult when one party to a divorce feels especially morally wronged.

When using adultery as a reason for obtaining a divorce, the court discourages the naming of the co-respondent in proceedings, something that a freshly-jilted party is often very keen to do.

Understandably, people also often find it difficult to grasp the fact that not only is the court rarely interested in an exercise of ‘who did what to whom’, but that your spouse’s immoral behaviour does not alter the outcome of financial proceedings on divorce in your favour, except in very exceptional circumstances (i.e. attempted murder).

Enough evidence for a divorce?

An interesting question that came out of the Ashley Madison headlines for me, was whether discovering your spouse’s details were registered to the site would be substantive enough evidence to obtain a divorce on the basis of their adultery, which is a fairly high threshold to cross.

My feeling would be that it would not suffice, because unless people possess categorical evidence of adultery having taken place, i.e. a wife giving birth to a child that is not her husband’s or an admission from a spouse, then it cannot be easily relied on as a basis for obtaining a divorce.

Rather, people who can’t provide the requisite evidence will instead rely on the fact of their spouse’s ‘unreasonable behaviour’, citing belief/knowledge of an ‘improper association’ with a third party.

Interestingly a tangential issue to this has received a fair amount of media attention recently, by virtue of a case where a woman discovered her husband had had a number of sexual relationships with other men, and was outraged to discover that this did not fall within the remit of adulterous behaviour for the purposes of obtaining a divorce. Another good example of when the law does not tally with clients’ personal expectations.

Ashley Madison argues that it doesn’t encourage adulterous behaviour, but instead provides ‘a safe alternative’ to having an affair close to home that would be more easily discovered (oh the irony).

I would argue that the safe alternative to the ultimate betrayal of your trusting spouse would be to address your own issues, the problems in your marriage and failing all else, calling time on what is clearly a relationship you are not and cannot invest in for whatever reason.

It is true that adultery is hardly a new phenomenon, but although sites like Ashley Madison may not actually force someone’s hand, or even at best, do anything more than cater for something which would have happened in any event, they undeniably do encourage a self-serving attitude that makes marriage an entirely pointless exercise.

Admittedly the tagline, ‘Life is short. Don’t be in a relationship if you can’t be faithful’, isn’t very catchy and I doubt it would attract the supposed following Ashley Madison has, but even in my line of work, I am not ready to give up on monogamy and the possibility of enduring and rewarding relationships just yet.

Amidst the battering that the renewable energy industry has been taking in recent months there is one technology which seems to have been hit harder than others. Arguably the cheapest source of renewable power, wind has faced subsidy cuts, retrospective changes to grandfathering provisions and significant changes to planning policy – which combine to undermine the profitability and stability of the technology.

One of the most aggressive changes to wind as a technology is the proposed removal under the (Energy Bill) of wind turbine developments of over 50 megawatts (MW) from the list of Nationally Significant Infrastructure Projects (NSIPs) that fall to be determined through the development consent order process. NSIP applications benefit from a front loaded and fast(ish) track determination process, which exists alongside the well establish determination procedures for ‘smaller’ applications which require planning permission. NSIPs are handled by the Planning Inspectorate, with the final determination being made by the Secretary of State (following an inquiry held by Inspectors). Final decisions are made with reference to the national policy statements on energy and other matters relevant to the local area including local plans.

The proposals would remove onshore wind from the NSIP scheme, and place decision making back in the hands of the local authority. The new policy, as stated in a recent Ministerial Statement, is that local planning authorities should only grant planning permission for wind developments where:

• The development site is in an area identifies as suitable for wind energy development in a local or neighbourhood plan; and
• Following consultation, it can be demonstrated that the planning impacts identified by affected local communities have been fully addressed and therefore the proposal has their backing.

Suitable areas for wind energy development will need to have been allocated clearly in a Local or Neighbourhood plan. Suitability based on other factors, such as wind resource, will not be sufficient and whether or not a proposed development has local backing will need to be decided by the planning authority.

Recent statements by Amber Rudd have also added to developers’ fears – including a statement that that local people would have the final say on planning applications, implying either that there will not be a right to appeal to the Planning Inspectorate where developments are refused due to local concerns or that such appeals would be pointless as Inspectors would not overrule local decision makers.

Whilst there has been some backtracking on that issue, with a spokesperson for the DCLG confirming that there will still be a right to appeal, Inspectors are still required to take into account the new guidelines including whether the scheme has local backing in their determinations. Given the Government’s clear stance, it is likely that this will result in Inspectors coming down against development where there are appreciable local objections – at least for as long as the Ministerial Statement stands.

We are living in a digital world where child protection is at its most vulnerable; or so the papers would have us believe. There is no denying that safeguarding remains the single most important aspect to get right in a school and we see the lengths that heads go to to ensure that this is the case. However, I am concerned that schools are trapped in a world dictated by a nanny state and are becoming more and more restricted from celebrating their children with the outside world.

We recently supported a brand new academy which opened on 1 September with just one reception class. This is normal for free schools – they begin with one year group and continue to admit children at that level until there are children in all planned year groups. What was unusual about this particular school was that the new reception class, the only class, contained 6 sets of twins.

This means that for the first year, half of the school’s children will be made up of twins and until those children leave school, that class will contain 12 children from just 6 families. This was an interesting and positive story which the school wanted to share with the community.

However the local authority strongly discouraged the school from sharing this with the press on the grounds of safeguarding. With my Governor hat on I have attended safeguarding training and I know that you only need to publish a child’s name, the school and the year that they start school to create a potential safeguarding issue. However in this case the parents had given permission for the photo to be used and the children’s names would not have been published.

In this particular instance, the safeguarding risks were extremely low but the head teacher was left in a difficult position where scaremongering outweighed his judgement.

Safeguarding remains an issue for every school – this will never change. However we should be celebrating our children and their families through positive pictures and stories that are shared on the school website, in newsletters and where appropriate, the press. We should also be trusting our school leaders to make sensible decisions based on experience, expertise and common sense.  The solution?  Less panic, more support.

Michelmores LLP is once again a sponsor of the South West Business Insider’s Made in the South West Awards, an annual event which celebrates the successes of the region’s manufacturers over the last 12-months.

Now in its fourth year, the awards recognise manufacturing excellence across eight categories, including Manufacturing Innovation, Sustainable Manufacturer and Manufacturing Company of the Year among many others.  Michelmores, which has over 600 manufacturing sector clients, is sponsoring the Aerospace and Defence Award category.

The winners will be announced at a gala dinner at The Grand by Thistle, in Bristol on 5 November 2015.

Head of the Manufacturing team at Michelmores, Richard Cobb commented:

“We are delighted to be a key sponsor of the Made in the South West Awards again this year.  They recognise the great work done throughout the year by those in the region’s manufacturing industry and the winners automatically go forward for the for the national Made in the UK awards, to be held in 2016.”

For a full list of award categories please see the South West Business Insider website.

Michelmores has developed ‘Business Starter Packs’, specifically designed to provide starting or expanding businesses with their essential and basic legal documents, support and commercial advice.

We recognise that many people start new businesses each year, from young entrepreneurs to businesses planning expansion. All need proper legal documents and advice, but low fixed price template packs from the internet are rarely good enough, and totally bespoke agreements can cost much more than a young business wants to spend. We aim to meet the demand from clients to bridge that gap with the new Business Starter Packs.

There are three fixed fee packages on offer, with the option to add on extras to create a tailored package to suit individual business needs. All involve the incorporation of a new limited company as a first step.

The Bronze package offers legal advice on company incorporation, guidance notes on matters relating to tax, real estate, website terms, employment, debt recovery, duties of directors amongst others and gives you contact introductions to recommended accountants, trademark agents and financiers. This package would suit start-ups looking for more advice and handholding than the typical “off the shelf” company formation agents.

The Silver package includes all services from the Bronze package plus additional features such as essential company secretary services for one year, templates for website ‘terms of use’ and ‘privacy policy’ and a 30-minute advice session from a specialist lawyer.

The Gold package features all services from the Bronze and Silver packages plus additional features such as one hour of tailored advice from one of Michelmores’ lawyers in specialist areas of your choice such as: corporate, commercial, employment, tax or real estate. This package would suit a business that is looking to take its next step to grow and commercialise an established business concept.

Additional options can also be added to any package, for example a tailored shareholders’ agreement and articles of association, advice regarding protection of intellectual property, an e-commerce package (which covers tailored online terms and conditions of sale, website terms of use, privacy policy and cookies policy) and supplier terms of business. These additional services may be purchased at reduced rates if bought within one year of subscription to the Business Starter Packs.

If you are interested in the Business Starter Packs or would like more information contact Caroline Bamford on cosec@michelmores.com

With the latest series of Dragons’ Den recently gracing our TV screens every Sunday evening, one recurring hurdle for a lot of the budding entrepreneurs is IP protection.

Properly considering intellectual property (IP) rights in your overall business strategy is often key to clinching a deal in the Den. Particularly if you are producing products for sale, the Dragons will frequently fire questions relating to what patent protection you have obtained, what trade mark have you got registered and whether you own the domain name.

IP protection and strategy should be a high priority for manufacturers, whose most valuable asset may be its IP rights. IP rights help an owner to prevent competitors from offering similar products, using similar brand names, open up opportunities to make money out of licensing your IP rights and often impress the Dragons.

So what are some of the key IP considerations?

1. Carry out some basic online searches

Invest some time into checking search engines, Companies House and online trade mark registries at the UK Intellectual Property Office (UKIPO), Office for Harmonization in the Internal Market (OHIM) and further afield depending on where your target market is) to check whether your chosen brand name/logo is already being used by a third party. Also check similar names/logos as this can  lead to risk of trade mark infringement. You may want to obtain official clearance searches (via a trade mark attorney) that you can rely on more than your own searches. Check if the domain name is available.

2. Protect your confidential information

Whilst it is normally a good idea to keep your new business idea a secret before you are ready to market (to maintain a competitive edge), it is absolutely essential if you have developed a product (including software) or a process that could be patentable. If you do not maintain confidentiality you risk losing the ability to patent it. Please ask us if you need a non-disclosure agreement to protect your position.

3. Develop your trading name

If you have decided to operate as an incorporated company in the UK then you need to decide on your company name and properly incorporate your company at Companies House. We can assist you with this. Note that you can decide to trade under different names than your ‘limited company’ name as this entrepreneur has done with her brand Good Bubble.

You may also want to purchase/register domain names and variants on the name – this is something you should be able to do easily, if the domain names are not already held by a third party through a recognised domain name registrar.

4. Protect your name and logo

Consider registering your main trading name, brand names and logos. You will also need to think about where your target market is and whether you want to go for UK protection, EU wide protection (called “community” marks) or further afield. Whilst you may gain automatic IP rights without registration in certain names and logos, registered rights provide much stronger protection against third parties – better you own the trade mark than someone else! We recommend you take legal advice in registering trade marks. This vitiligo skin care entrepreneur “forgot” to put her trade mark on her packaging almost losing the Dragons’ confidence (but she secured investment).

5. Consider other IP protection

As well as trade marks, you can register other types of IP including patents and design rights. Patents can be key in the manufacturing industry in order to protect various inventions as well as the production processes. When looking at your IP strategy you should consider where your current and future target markets are and whether IP protection is appropriate. Some countries like China have a first-to-file system, meaning that if someone goes off and registers your trading name before you, you will find it very difficult to then obtain the registered name (Apple and Facebook have both faced this issue!).

In the UK there are various IP rights that arise automatically including copyright and unregistered design rights. It can be important to retain evidence of your creation and often creators will sign and date their own work and sometimes even post it back to themselves. On websites, marketing materials and certain goods, owners of copyright tend to assert their rights by inserting a short copyright notice, for example: © Michelmores LLP (sometimes followed by the year created). This is not essential but makes third parties aware of your IP rights. Also not essential, but potentially helpful, is to assert your rights over your trade marks whether registered (by inserting the ® symbol) or unregistered marks (by inserting the ™ symbol). Note that it is a criminal offence to use the ® symbol for an unregistered mark, so be careful.

You may also want to protect your IP by not telling anyone about it – i.e. by keeping a trade secret. Keeping recipes as trade secrets is sometimes used in the food and drink industry, which this entrepreneur of a new range of crisps (Tags®) might have considered.

6. Clean up ownership of IP

Most investors want to see that the company they are investing in owns all of the IP rights or has clear licences to use the IP rights. Often in start-ups, an entrepreneur will invent something which is technically owned by him/her as an individual. In order for the invention to be owned by the company, there must be a legal assignment from the inventor(s) to the company. Investors may even ask to see this agreement. Care must also be taken to ensure IP rights are legally transferred through employment contracts, consultancy contracts, design contracts and other contracts where individuals or third parties are developing IP for the company.

A lot of the above require time and financial investment, so we often advise clients to prioritise various stages if budgets are tight (as well as wider considerations like employment contracts, directors’ service contracts, shareholder agreements and articles of association). This yoga product entrepreneur explained that he had spent £60,000 (!) on registering his intellectual property rights (his company has a patent for his exercise apparatus).

If you have a good brand or product, you will probably be copied at some point. If you have registered rights you should be in a much stronger position to dissuade potential copiers and stop actual copiers.

Michelmores: We have developed a range of Business Starter Packs, specifically designed to provide starting or expanding businesses with their essential and basic legal documents, support and commercial advice.  Getting your ‘legals’ cleaned up can make your business much more appealing to potential investors/Dragons (as well as ensuring you are complying with your legal obligations).

The Intellectual property Office (IPO): Contains lots of information on IP rights and has also taken a keen interest in the Dragons this series with its IP blog on each episode – an interesting read for any entrepreneur (particularly if you’re thinking of applying to the Den!).

This article is in no way an exhaustive list of IP or business start-up considerations, for more information please contact David Thompson, Partner in our Commercial team.

Ashley Madison, a site encouraging extra-marital affairs, recently suffered a data security breach by hacker group “Impact Team” which led to several gigabytes of data including names, payment details, emails and even the website’s source code being leaked.

How do occurrences like this happen?

Advances in technology have enabled all of us to collect, learn and share information about each other more quickly than ever before. Businesses now have advanced tools available to store and protect vast amounts of customer data. But hackers also have increasingly sophisticated methods of gaining unauthorised access to this data. And so begins a digital game of cat and mouse. Cyberattacks are more common than many realise, and readers may already be aware of high profile cyberattacks that affected JP Morgan Chase, Target, Home Depot and Sony Pictures. The scale of the problem is indicated by the Department for Business, Innovation and Skills (“BIS”) reporting that 81% of large corporations and 60% of small businesses reported a cyber breach in 2014.

Why is it important to be on top of data protection?

The consequences of a data breach can be severe. BIS reported that the cost of breaches nearly doubled in 2013/14, with the average cost for the worst cyber-security breach in a year estimated between £600,000 to £1.15 million for large businesses and £65,000 to £115,000 for smaller ones. Such costs may not be backed off to a business’ insurance.

In the Ashley Madison case, the media exposure has been astounding. There has been irreparable damage to Ashley Madison’s goodwill as well as two suicides linked to the data leak. A google search for “Ashley Madison suicides”, for example, now returns just under 18 million results. Not a position any business wants to find itself in.

In the UK, a breach of data protection law can lead to a £500,000 fine from the Information Commissioner’s Office (“ICO”), the UK regulator for data protection. This is likely to significantly increase in the next few years when the General Data Protection Regulation is implemented and there is also the possibility of civil claims from aggrieved data subjects.

How do I help prevent myself from being the next Ashley Madison?

One of the many issues which flows from the Ashley Madison data breach is whether anything could have been done to prevent the breach in the first place, or at least limit its impact.

With this in mind, keeping information secure is a cornerstone of data protection legislation in the UK.  Monetary penalty notices overwhelmingly relate to the 7th data protection principle, which requires appropriate technical and organisational measures to be taken against unauthorised or unlawful processing of personal data (“7th DPP”). That said, there is no “one size fits all” solution when it comes to information security.

Whilst implementing a robust data protection policy does not often find itself towards the top of a business’ to-do list, a robust data protection policy and cybersecurity strategy, as well as effective implementation of the 7th DPP can help to reduce the likelihood of a breach in the first place and go a significant way towards minimising the impact.

Amongst other aspects, a well crafted data protection policy will explain what data is being handled, who is allowed to access that data and which processes are being applied to that data. The process of implementing a data protection policy can also prove valuable in itself because it can act as a catalyst for a more general review of data protection practices, by leading business to ask the following questions:

• Do we collect more data than we need?
• Do we store data for longer than we need to?
• Where do we save and do we encrypt user passwords? Could we easily encrypt more of this data, our servers?

Asking these questions is key as failure to encrypt information in accordance with and otherwise adhere to the 7th DPP, for example, is an aggravating factor when the ICO is considering enforcement action.

Life is short: have an affair – Review your data protection practices.

Given the sophistication of recent cyberattacks and the ease with which an employee’s mistake can lead to customer data being distributed (for a recent example see: Soho sexual health clinic errantly discloses names of 780 HIV positive patients), businesses need to be aware that data privacy matters, have strong cybersecurity measures in place and take data security seriously. Implementing an effective data protection policy and keeping it under regular review can be a valuable tool to a business’ cyber defences, helping to ensure it is in a better position possible to minimise the impact of any attempted cyber-attack or data breach.

Modern communication has changed, talking has become old-fashioned, instead people ‘tweet’,’ like’, ‘retweet’, ‘unlike’ and ‘favourite’. Social media has provided a forum for anyone to freely air personal views and share information with their groups.  Whilst this is hugely popular amongst the 304 million monthly active users on Twitter, it does raise issues in relation to protection of users’ intellectual property (‘IP’) rights.

Despite the differences between English and US law, both jurisdictions agree that copyright can exist in as few as 140 characters, in images or in videos. This has recently come as a surprise to many Twitter users who have had their ‘tweet withheld’ as a result of a copyright takedown notice being submitted by the original author of the posted material.

Recent instances of users’ jokes being reported for copyright infringement has been met with criticism by some Twitter users who consider that social media platforms are now taking an increasingly heavy handed approach to IP protection. In reality, its stance has changed little since its inception. Under the Twitter Rules and Terms of Service, unauthorised use of copyright material is not permitted and users are encouraged to share content by ‘retweet’, which acknowledges the author. The requirements on users therefore remain the same.  However, the decision by Twitter to increase the transparency of its procedures and clearly mark reported content as ‘withheld’ has brought its efforts to identify violations of IP rights to the attention of its users.

Some users have pointed to the precedent of unattributed use of content on social media since its inception and raised concerns over the way in which copyright can be proven in relation to jokes or anecdotes.

Whilst potentially irritating for users in the context of everyday exchanges, any increased activity by social media platforms will no doubt be welcomed by businesses seeking to enforce rights against IP infringers. A common example of IP infringement in a social media context is the use of ‘lookalike’ accounts which use the branding, images and text to pass itself off as a business. Takedown notices are usually issued as soon as the infringement is discovered as these fake accounts can be highly damaging to businesses’ reputation.

The concept of removing infringing material from websites is by no means new. Twitter is required to comply with relevant legislation (Digital Millennium Copyright Act 1998 in the USA and the Electronic Commerce (EC Directive) Regulations 2002 in the UK and across Europe) in relation to the content that it hosts. In order to protect itself against liability for damages, other civil remedies or criminal sanctions, a website provider is required to ‘respond expeditiously to remove or disable access’ to any information which it knows to be infringing.

With this is mind, it is clear that Twitter must act promptly to disable access to infringing tweets, or risk a claim being made against it by the original owner of the IP rights. Although neither the UK nor US legislation specifies what information should be communicated to other website users in respect of the disabled content, it appears that Twitter has adopted a transparent approach in relation to the removal of content.

It is interesting to see the mixed reaction of users in relation to Twitter’s perceived increased intervention in relation to IP rights.  It does not appear that there has been a change in approach; it has simply become more visible.

It is a valuable reminder for businesses and individuals that IP rights do apply on social networks in the usual way and that there are relatively simple methods of removal where creative works have been used without permission.  It is therefore of fundamental importance for rights holders to be fully aware of their rights and how best to protect these.

For more information please contact Charlotte Bolton, Solicitor in the Commercial Disputes & Regulatory team on charlotte.bolton@michelmores.com or on 01392 687745