Artificial intelligence cannot be legally named as an inventor to secure patent rights, the UK supreme court has ruled.

In a judgment on Wednesday, Britain’s highest court concluded that “an inventor must be a person” in order to apply for patents under the current law.

The ruling comes after the technologist Dr Stephen Thaler took his long-running dispute with the Intellectual Property Office (IPO) to the country’s top court over its rejection of his attempt to list an AI he created as the inventor for two patents.

The US-based developer claims the AI machine named DABUS autonomously created a food or drink container and a light beacon and that he is entitled to rights over its inventions. However, the IPO concluded in December 2019 that the expert was unable to officially register DABUS as the inventor in patent applications because it was not a person.

The decision was upheld by the high court and the court of appeal in July 2020 and July 2021. After a hearing in March, a panel of five supreme court justices have unanimously dismissed Thaler’s case.

The DABUS dispute centred on how applications are made under the Patents Act 1977 legislation, and the judges were not asked to rule on whether the AI actually created its inventions.

Lord Kitchin, with whom Lords Hodge, Hamblen, Leggatt and Richards agreed, said the IPO “was right to decide that DABUS is not and was not an inventor of any new product or process described in the patent applications”.

He continued: “It is not a person, let alone a natural person and it did not devise any relevant invention. Accordingly, it is not and never was an inventor for the purposes of … the 1977 act.”

The judge said the IPO was entitled to find that Thaler’s applications should be taken as “withdrawn” under patent rules because “he failed to identify any person or persons whom he believed to be the inventor or inventors of the inventions described in the applications”.

The supreme court also rejected Thaler’s argument that he was entitled to apply for patents for DABUS inventions on the basis that he was the AI’s owner.

Kitchin said DABUS was “a machine with no legal personality” and that Dr Thaler “has no independent right to obtain a patent in respect of any such technical advance”.

Patents, which provide protective legal rights, are granted for inventions that must be new, inventive and capable of being made or used or a technical process or method of doing something, according to government guidance.

Thaler’s case reached the supreme court amid recent scrutiny of AI developments – such as OpenAI’s ChatGPT technology – including their potential impact on education, the spread of misinformation and the future jobs market.

His lawyers had argued at the March hearing that patent law did not “exclude” non-human inventors and contains no requirements over “the nature of the inventor”.

However, Stuart Baran, for the IPO, said in written arguments that patent law required “identifying the person or persons” believed to be an inventor.

Read more:
AI cannot be named as patent ‘inventor’, UK supreme court rules

Apple has been forced to stop selling the Apple Watch in the US this week after a landmark lawsuit claimed the tech giant stole technology that monitors users’ vitals.

The move comes after an order in October from the International Trade Commission (ITC) that could bar Apple from importing its Apple Watches after finding the devices violate medical technology company Masimo’s patent rights.

The White House had 60 days to review the ITC order issued on October 26, meaning Apple could have continued selling the Series 9 and Ultra 2 versions of its watch through Christmas.

However, Apple said on Monday that it planned to suspend sales of the watches for online customers on Thursday and from its stores on Sunday. It said the move was to ensure that it complied with the ITC order.

Apple pledged to “take all measures” to resume sales of the Series 9 and Ultra 2 models in the US as soon as possible if the ITC’s ban was not overturned.

The long-running legal dispute between Masimo and Apple is a David v Goliath battle that involved the world’s richest corporation and a rival a fraction of its size.

According to the Los Angeles Times, Apple met with Masimo more than a decade ago and discussed its technology that allowed a user’s blood oxygen levels to be read.

Joe Kiani, chief executive of Masimo, reportedly believed the companies were set for a partnership or perhaps his business would be bought by Apple and its chief executive, Tim Cook.

Instead, Masimo alleged that Apple began to hire its top talent who quickly started patenting similar technologies that they had previously worked on.

While President Biden has the power to veto the ITC order, such interventions are rare.

“Maybe Apple’s board will ask Tim Cook, ‘Why didn’t you buy Masimo or license their technology in 2013? Did you even try to settle with Masimo before you took this step?’” Kiani told the Los Angeles Times. “That is a hope, but one that makes me feel better.”

Kiani believes he has already spent $60 million in legal fees battling Apple, but says he is willing to spend even more to protect his work.

Read more:
Apple banned from selling smartwatches in US over medical technology patent infringement

The European Union has formally announced it suspects X, previously known as Twitter, of breaching its rules in areas including countering illegal content and disinformation.

Digital commissioner Thierry Breton set out the alleged infringements in a post on the social media platform.

He said X, which is owned by Elon Musk, was also suspected of breaching its obligations on transparency.

X said it was “co-operating with the regulatory process”.

In a statement the firm said it was “important that this process remains free of political influence and follows the law”.

“X is focused on creating a safe and inclusive environment for all users on our platform, while protecting freedom of expression, and we will continue to work tirelessly towards this goal,” it added.

In October the EU said it was investigating X over the possible spread of terrorist and violent content, and hate speech, after Hamas’ attack on Israel.

X said then that it had removed hundreds of Hamas-affiliated accounts from the platform.

The investigation was the first under the EU’s new tech rules.

Under a piece of legislation introduced in August, the Digital Services Act (DSA), big tech firms operating in the EU have beefed up obligations to protect users.

Breaches can result in huge fines or services being suspended.

Read more:
EU takes action against Elon Musk’s X over disinformation

The Economic Crime and Corporate Transparency (ECCT) Act was passed in late October after years of public consultation on tackling economic crime, spurred on by Russia’s invasion of Ukraine.

The Act contains measures to stop criminals forming companies in the UK and using them for illegal purposes. It also gives new powers to Companies House in the fight against money laundering and fraud.

The ECCT Act represents a major shift in Companies House’s role. It changes it from a passive curator of the public Companies Register to an active watchman. It now has powers to police the Register to prevent inaccurate information from entering it and force those who control companies to formally identify themselves.

How effective the new laws will be in fighting economic crime will depend on how the government chooses to put them into action via secondary legislation. Much will also depend on how Companies House proceeds with the necessary systems development, process changes, recruitment and awareness-raising to allow it all to run smoothly.

John Korchak, Managing Director, Inform Direct a company secretarial and formation specialist explains parts of the Act that will most directly affect UK companies and how they are likely to work in practice.

Identity verification

When this is fully in force it will be built into the company formation process so as to make it impossible to incorporate (form a company) without formally identifying its company officers and PSCs (persons with significant control).

Identity verification will be carried out directly with Companies House or through a new type of intermediary called an Authorised Company Services Provider (ACSP). Both routes will carry an equal level of assurance because ACSPs will be agents such as company formations, tax, legal or accounting professionals who already conduct due diligence checks on clients as part of their duties. They will themselves be identity checked and registered with a supervisory body for anti-money laundering (AML).

Verification will take place through a third party provider of identity document validation technology such as the ones already in use in banks and other financial institutions.

As far as possible, the government aims to make identity verification a one-off event for each individual director or PSC. In theory at least, once a person gains verified status they can occupy positions in various companies without having to be ID checked separately for each appointment.

Existing companies’ officers and PSCs will have to go through this process too, or risk having an ‘unverified’ flag against their company on the public register. Identity verification is also likely to be extended to limited liability partnerships (LLPs).

Changes to Companies House accounts filing

Small and micro-entity companies will have to file fuller accounts. In the consultation phase leading up to the ECCT Act, it was argued that the minimal amount of financial information these companies are currently required to expose on the public register does not justify the benefits of limited liability. To earn that right, small companies including micro-entities will soon have to file a profit and loss account as well as a balance sheet. This makes it harder for money launderers to conceal the flow of funds through their companies. However, it will also cause concern among law-abiding companies because it means disclosing their turnover and profitability, commercially sensitive figures that many small businesses are not used to revealing.

Companies House is also committed to moving to software-only accounts filing. This means that many small and micro companies will have to source accounting software that meets certain requirements, such as full iXBRL tagging. Other existing routes for filing accounts, such as Companies House’s online service (WebFiling) and paper filing, will be phased out in favour of software packages. These accounts filing changes will take many months to come into force, which does leave time to find suitable software.

More information required about shareholders

The Act will require companies to record more information about their shareholders. The register of members, where shareholder information is recorded, will have to include full names (full first names rather than initials) and service addresses. It will also be required (eventually, likely via secondary legislation) to disclose whether any shareholders are acting as nominees for the real shareholders. This is intended to make it harder to remain anonymous by hiding behind nominees.

New ‘failure to prevent fraud’ offence

A new ‘failure to prevent fraud’ offence is designed to stop companies benefitting from fraud committed by their officers or employees. The company will be held to account where specified fraud offences are committed by anyone in the company and where adequate fraud prevention measures were not in place. It will not be necessary for prosecutors to prove that the directors knew about it. This is aimed at producing a shift in corporate culture whereby bosses stop turning a blind eye to fraudulent activity within their companies.

Registered email and office addresses

Companies will have to supply a registered office address where Companies House can reliably contact them and expect a reply. PO boxes are banned. Companies will have to supply a statement that their registered office address is ‘appropriate’ in that correspondence sent to it would be expected to come to the attention of company officers. The company also has a duty to ensure that the delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery.

A company email address will be required along similar lines to the office address: one where emails can be expected to be received and acknowledged by company representatives. Like much of the Act, how this will work in practice is in the process of being established.

Restrictions on corporate directors

Finally (there is more in the Act but we are talking about things that will most directly affect the day-to-day running of companies), existing restrictions on corporate directors will be brought into force. These are aimed at curbing the use of obscure chains of company ownership for economic crime. Under the new rules, only entities with ‘legal personality’ (registered incorporated limited companies) can be directors of other companies. Trusts and other non-incorporated entities cannot. This tightens up traceability of ownership and influence.

Furthermore, chains of faceless corporate directors will be curbed by a new rule. Company A can be a director of Company B, but only if all of Company A’s directors are natural persons and have had their identities verified. Company A must also be UK-registered.

This long-awaited partial ban on corporate directors and the other measures described in this article are intended to usher in a new era of corporate accountability. This legislation is a balancing act between imposing additional administrative burdens on companies and helping them to operate in a more transparent and crime-free corporate environment.

Read more:
A New Chapter in Transparency? Companies House’s New Powers to Tackle Economic Crime

The Fourth Board of Appeal of the European Union Intellectual Property Office (EUIPO) has reversed the refusal of Haribo’s figurative trade mark consisting of an image of its ‘Goldbear’ gummy bear on the basis that the mark does satisfy the minimum degree of distinctiveness.

Rigo Trading S.A, a holding company for Haribo, the well-known German confectionery company, filed an application for an international registration designating the EU for a figurative mark of its HARIBO ‘Goldbear’ for a range of non-edible goods in Classes 9, 14, 16, 18, 20, 21, 24, 25, 26, 27 and 28 including amongst other things clothing, jewellery and games.

Emily Roberts, partner in the Intellectual Property team at independent UK law firm Burges Salmon  explains that the mark was refused for the majority of the goods in the application on the basis that it was considered to be devoid of distinctive character.

The examiner found that the appearance of the mark was already commonly used for decorative, artistic and aesthetic purposes for the contested goods. In support of its reasoning, the examiner provided various examples of other gummy bear shaped products and goods bearing gummy bear decoration on the market within the same classes as those applied for, including gummy bear shaped hairclips, a gummy bear shaped coin purse and a bag with a gummy bear decoration.

The examiner considered that the mark would be perceived as a commonplace depiction of a gummy bear as either a decorative element, the shape of the goods themselves or of their packaging, and as a result the mark did not meet the minimum degree of distinctive character necessary to function as a trade mark.

Board of Appeal decision

Haribo appealed the refusal and it came before the Fourth Board of Appeal of the EUIPO.

Overturning the refusal, the Board confirmed that a trade mark is considered to possess sufficient distinctive character if it is capable of enabling the relevant public to identify the origin of the goods which it covers and to distinguish them from those of other undertakings.

The Board considered that the sign, a gummy bear or a characterised figure of an animal, had no connection with the contested goods. Further, that the sign conveyed an overall impression that is unrelated to the likely or customary appearance of these goods. The mere fact that some of the contested goods may take the shape of a gummy bear is not in itself sufficient to establish that the mark consists a representation of the shape of the goods at issue.

In reviewing the examples of gummy bear shaped/decorated products provided by the examiner, the Board determined that the examples were not sufficient to demonstrate that it was an established practice of the relevant market sectors of the contested goods to offer gummy bear shaped items, or that the relevant public would perceive a gummy bear as a common motif.

The Board considered that the sign was not excessively simple and banal but included distinct characteristics, such as the positioning of the ears and the smile, which would create a visual impact on the relevant consumers. The Board also emphasised that originality and novelty are not relevant when considering the distinctive character of a mark.

As a result, the Board reversed the examiner’s decision and held that the sign had at least the minimum degree of distinctive character necessary to be protected as a trade mark in the European Union.

Key takeaways

The decision will be welcomed by brand owners. It confirms that when assessing the distinctiveness of a figurative mark, it is not necessary for a sign to be novel or original. Further, even if there are instances of decorative use or product shapes which are similar to a sign, this is not sufficient in itself to support a finding of non-distinctiveness. If a sign enables consumers to distinguish those goods from others on the marketplace, that is sufficient.

Read more:
Appeal decision finds Haribo’s gummy bear figurative trade mark distinctive

With the festive season fast approaching, many employers have already finalised their plans for a staff party. Others may prefer a more spontaneous approach.

Either way, there are many legal issues for employers to consider. This is because work-related functions such as Christmas parties and similar events are effectively work activities covered by the same legislation that applies to the workplace.

Consequently, employers can be vicariously liable for their employees’ actions, such as

harassment, bullying and even personal injury. Of course, the individual engaging in inappropriate behaviour can be personally liable, too.

Harassment is defined in the Equality Act 2010 as unwanted conduct related to a relevant “protected characteristic” which has the purpose or effect of either:

• Violating an individual’s dignity or
• Creating an intimidating, hostile, degrading, humiliating or offensive environment for an individual

Protected characteristics include (but are not limited to) someone’s age, sexual orientation and race. Sexual harassment, which has been a high-profile issue throughout 2023, is unwanted conduct of a sexual nature. It is all too easy to see how offensive behaviour at an office party can constitute harassment.

Employers may have to manage grievances or disciplinary proceedings if the social event does not go to plan. In the worst-case scenario, they may be involved in Employment Tribunal proceedings.

So, what can employers do to ensure social events run smoothly?

• As office parties are an extension of work, remind everyone that the usual policies and procedures still apply. Bullying, harassment and disciplinary procedures could all be relevant.
• Consider whether you want a specific policy for work-related social events. This would provide clarity on acceptable standards of behaviour.
• Remind senior managers beforehand of the expected standards of behaviour and that they need to set an example.
• Depending on the location and guests, you may need a health and safety risk assessment of the venue.
• As well as vicarious liability, you have a duty of care to your employees, so discourage excessive alcohol consumption.
• If you provide free alcohol, limit this to either a couple of hours or to certain types of drinks.
• Make sure you provide plenty of non-alcoholic drinks for those who are driving or who do not drink for religious or other reasons.
• Remind everyone that it is illegal for employees under the age of 18 to consume alcohol and that disciplinary action could follow for the individual or anyone buying them alcohol.
• Make it clear that it is strictly forbidden for anyone to be under the influence of, or use or be in possession of illegal drugs.
• If the traditional evening party seems too risky, hold a lunchtime event to reduce the possibility of employees drinking too much alcohol and behaving inappropriately.

There is another option, of course, not to have a staff party at all. Bullying and harassment, inappropriate sexual comments, upsetting photographs on social media and drunken fights occur all too frequently at staff parties. For these reasons, many employers no longer organise any staff social events. However, if you choose not to have a party, you should consider how this may impact staff morale and engagement.

Read more:
How can employers avoid problems at staff parties?

Rather than remove copyrighted material from ChatGPT’s training dataset, the chatbot’s creator is offering to cover its clients’ legal costs for copyright infringement suits.

OpenAI CEO Sam Altman said on Monday: “We can defend our customers and pay the costs incurred if you face legal claims around copyright infringement and this applies both to ChatGPT Enterprise and the API.” The compensation offer, which OpenAI is calling Copyright Shield, applies to users of the business tier, ChatGPT Enterprise, and to developers using ChatGPT’s application programming interface. Users of the free version of ChatGPT or ChatGPT+ were not included.

OpenAI is not the first to offer such legal protection, though as the creator of the wildly popular ChatGPT, which Altman said has 100 million weekly users, it is a heavyweight player in the industry. Google, Microsoft and Amazon have made similar offers to users of their generative AI software. Getty Images, Shutterstock and Adobe have extended similar financial liability protection for their image-making software.

Altman made the announcement at OpenAI’s first ever developer conference, meant to attract programmers working with ChatGPT. Roughly 900 developers from around the world attended. Satya Nadella, CEO of Microsoft, made an appearance during Altman’s address. Altman also debuted a ChatGPT app store, launching later this month, where developers can advertise and monetize their custom bots built with ChatGPT as well as a new model, GPT-4 Turbo.

Household-name authors have filed at least three suits against OpenAI for the alleged use of their copyrighted work in training the chatbot, which generates text in response to users’ prompts. The plaintiffs include Jonathan Franzen, John Grisham, Michael Chabon, George RR Martin, Jodi Picoult and the Authors Guild, a professional association. To create such software, AI companies feed billions of lines of text sourced from the internet, including databases comprised of tens of thousands of copyrighted books. OpenAI previously said in a statement: “We’re optimistic we will continue to find mutually beneficial ways to work together to help people utilize new technology in a rich content ecosystem.”

Read more:
OpenAI offers to pay for ChatGPT customers’ copyright lawsuits

The American taste for litigation is spreading beyond its borders, and it is coming for British small businesses next – this is the key finding of new research by Fair Civil Justice.

Fair Civil Justice (FCJ) commissioned quantitative and qualitative research to better understand legal actions against British SMEs and to inform recommendations that mitigate the risk of predatory claims.

Our research, derived from in-depth interviews highlight how SME decision makers experience wide-ranging and often very severe impacts from legal action, often entirely disproportionate to the purported wrongdoing. Key findings include:

• In total, 15% of UK SMEs have faced legal action or the threat of it in the last five years – estimated to represent a total of around 120,000 businesses.
• By contrast, only 8% of SMEs have had proceedings initiated against them via an ombudsman and only 7% have had an alternative dispute resolution (ADR) procedure brought against them in the past five years.
• The vast majority (90%) of SMEs who have been subject to legal action or the threat of it claim to have experienced at least one impact – while 41% of SMEs who have not themselves been subject to legal action or the threat of it in the past five years nonetheless claim to have been impacted in some way.
• A majority of SMEs (62%) have some form of complaint resolution mechanism in place already.

There is also a clear sense that the legal process is weighted against SMEs defending a claim, leading many to settle, and a lack of support and guidance for SMEs facing legal action for the first time.

Seema Kennedy, Executive Director of FCJ, said: This timely research shows how the litigation culture developing in the UK is felt by SMEs and the personal impact it has on entrepreneurs who are an essential part of our communities. Everyone who wants to see economic growth should read the findings and recommendations and take action to protect small businesses from the effects of speculative legal action.

Read more:
New research highlights increasing threat of US-style litigation culture to British business SMEs

TikTok are involved in yet another data breach fine following a £12.7 million fine by the UK for illegally processing the data of 1.4m children under 13.

The video-sharing platform is being fined by the European Data Protection Board after they reached a decision over the platform’s processing of child data.

The investigation opened in 2021 by the data protection commissioner in Ireland into TikTok’s level of compliance with the EU’s general data protection regulation

The fine is expected to be issued in the next four weeks, but what exactly could the value of that fine be? GDPR and compliance expert, and Director of Skillcast, Vivek Dodd, shares just how high it could be, and how GDPR fines are calculated.

“Penalties for breaching the GDPR can reach up to €20 million or 4% of annual global turnover, whichever is highest.” Vivek states.

“There are a number of factors that influence the size of the penalty, all of which are examined by the EDPB ahead of the issuing of the fine in September.” Vivek has outlined the eight factors that will be considered.

1. Gravity, nature & duration of breach

2. Personal data categories affected

3. Negligent or intentional infringement

4. Actions taken to mitigate the damage

5. Degree of responsibility of data controller/processor

6. Previous data breach infringements

7. Cooperation with supervisory authorities

8. Aggravating or mitigating factors (e.g. financial benefits gained from the infringement)

Considering all eight factors, Vivek adds, “Given TikTok’s previous fines earlier this year and the fact it’s data of those under 13 years-old, it wouldn’t be a surprise if the platform faces a huge fine. 4% of TikTok’s annual global turnover could equate to $376 million if we use BusinessofApps’ estimated $9.4 billion in annual revenue for TikTok in 2022.”

Discover the common data breaches in businesses and how you can prevent a huge fine like TikTok with Skillcast.

Read more:
TikTok’s latest GDPR breach could cost them up to $376M

In an ever-evolving business landscape, the welfare of employees continues to be at the forefront of responsible leadership.

A recent survey by Pregnant Then Screwed, encompassing the experiences of over 24,000 parents, has revealed the extent of  pregnancy and maternity discrimination. The implications for business owners are clear, and understanding the full scope of legal obligations and potential risks is paramount.

The findings included:

• 52% of mothers faced some form of discrimination when pregnant, on maternity leave or when returning to work.
• 20% of mothers left their job following a negative or discriminatory experience.
• 64% of pregnant women received hurtful comments about their appearance.
• 10% of women were bullied or harassed when pregnant or returning to work.
• 7% of women lost their jobs for various reasons.

The Business Risk

The figures above translate to significant business risk exposure. The UK has stringent protections for pregnant women and new mothers, but ignorance or neglect of the legislation can lead to costly Employment Tribunal claims, reputational damage that can affect your brand’s integrity and the loss of valuable talents and skills.

What You Need to Know – Key Rights and Protections

• The right to time off for ante-natal appointments.
• Up to 52 weeks’ statutory maternity leave regardless of length of service.
• The right to return to the same or comparable job.
• Depending on length of service and salary, the right to statutory maternity pay or maternity allowance.
• Extensive health and safety protection while pregnant or breastfeeding.
• Redundancy protection where there is priority for suitable, alternative employment for an employee who is on maternity, adoption, or shared parental leave over other individuals at risk of redundancy where a vacancy exists.
• Crucially, the Equality Act 2010 prohibits discrimination, harassment and victimisation in relation to nine “protected characteristics” one of which is pregnancy and maternity. The Act also protects job applicants and recruitment needs to avoid discrimination and conscious or unconscious bias. So, don’t ask about a woman’s plans to have children or about her childcare arrangements or decide not to appoint someone because they are pregnant. No length of service is needed for a discrimination claim and compensation is unlimited. There is also a separate award for injury to feelings.
• The Employment Rights Act 1996 protects women from detriment relating to pregnancy, childbirth or maternity and any dismissal for a reason connected with these is automatically unfair. No qualifying period of service is needed unlike an “ordinary” unfair dismissal claim where two years’ service is required.

Employers need to be aware that new rights will be introduced in due course.

• The Employment Relations (Flexible Working) Act 2023 is expected to be implemented in summer 2024. Employees will be able to make two requests in each 12-month period rather than one. Employers will have to consult with employees before rejecting a request and will need to deal with it in two months rather than three. Not included in the Act, but expected to be introduced at the same time, is making the right to request flexible working a day one right (26 weeks’ continuous employment is needed currently).
• The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 will extend the current redundancy protection so that a mother returning from a year of maternity leave can receive six months’ additional redundancy protection. There is currently no date for this change.

Transforming Challenges into Opportunities

While these new findings are disconcerting, they also present an opportunity for forward-thinking leaders. Many employers want to support pregnant employees or those on – or returning from – maternity leave because they value and want to retain their talent and skills. This is increasingly important at a time of a skills shortage and a competitive job market. This proactive approach is not just ethical; it’s strategic and sends a powerful message about your organisation’s values and commitment to employee wellbeing.

Read more:
New Report Sheds Light on Pregnancy and Maternity Discrimination

Outsourcing specialist, AdvanceTrack, has won a landmark two-year High Court case against one of its direct competitors, GI Outsourcing, after the latter used its brand unlawfully in a targeted Google Adwords campaign.

His Honour Judge James Tindal passed his judgment on the long-running battle between the two outsourcing companies, held at Birmingham Civil Justice Centre, ruling in favour of AdvanceTrack.

He concluded that GI Outsourcing, through a third-party Midlands-based marketing agency, had infringed the trademark of AdvanceTrack and was also liable for passing off AdvanceTrack’s trademark as its own – breaching laws protecting brands from companies illegally using Google to target their competitors.

AdvanceTrack [the trading name of E-Accounting Solutions Limited], a specialist outsourcer of accountancy and audit services and a member of the Institute of Chartered Accountant of England and Wales (ICAEW), was one of at least four companies being targeted by GI Outsourcing, but the only one to see the case through to the High Court.

“This was a six-figure risk, but it was crucial to protect our brand, our competitors’ brands, and the wider industry,” said Vipul Sheth (pictured), founder and managing director of AdvanceTrack, who has pledged to award 100 per cent of any damages they receive following the judgment to charity.

“This wasn’t ever about the money, it was about holding our industry to higher standards, so it was very disappointing we had so much resistance from GI Outsourcing in this case. We felt it was obvious they were infringing our trademark – as well as potentially others – and marketing through Google Adwords unlawfully.

“We cannot and should not stand for this type of behaviour. The judgment is a win for us, but more so it’s a win against bad practice, which if left unchallenged could be a scourge on our profession. There are a handful of firms in this space, including ourselves, that are working incredibly hard to raise standards, and when organisations act like this, they are damaging those efforts.”

GI Outsourcing [the trading name of Global Infosys Limited] is owned by Macalvins Group and infringed UK trademark laws – which are based on EU Law – when launching its Google Adwords campaigns using AdvanceTrack and three other known outsourcing competitors during the Covid-19 pandemic period, between March and May 2021.

GI Outsourcing claimed and the judge found that it was an error by its marketing agency, however, emails show CEO Tariq Husain involved in active discussions about the campaign and the keywords it would be bidding for. The judgment says Mr Husain “plainly authorised – indeed instructed – those adverts”.

The judge ruled against GI Outsourcing, noting that its director Mr Husain acknowledged the value of the reputation of the AdvanceTrack mark. He said GI Outsourcing had tried to “use its [AdvanceTrack’s] reputation” and included AdvanceTrack’s brand in error in its ‘Ad Text’ multiple times during the campaign, which was called “ill-fated”, “disastrous”, and a “serious error” in Judge Tindal’s approved judgment.

Judge Tindal also said: “This is rather a legal minefield…This case may be helpful as an example of how not to do it. A wise first move will be a search whether a competitor’s brand is actually a trademark”, adding “including it [the trademarked brand] in the advert itself as opposed to as just a ‘keyword’ can backfire commercially as well as legally”.

He also added, however, that “even limiting it to a keyword may not be enough to avoid liability”, adding: “It may be wise for a small business to get advice, especially in these legally as well as commercially uncertain times, as our legal system begins in earnest to detach from the EU.”

AdvanceTrack was supported in the case by John Ward at Midlands-based Brindley Twist Tafft and James Solicitors, Barrister Nick Zweck KC from IP specialists Hogarth Chambers, and Leanne Hall from patent and trademark law experts Serjeants.

Leanne Hall said: “We would always recommend carrying out a search to check whether someone else has registered a trademark before you use it. As this case has shown, using a competitor’s mark can make you liable for trade mark infringement.

“Using a Registered Trademark in an advert that is visible in the search results is not acceptable because it creates a high likelihood that customers will confuse the two brands.”

Mr Sheth added: “Our legal team has been fantastic throughout this process, having been alongside us for around two years, and I’d like to commend their efforts to help us win this important case.”

Read more:
AdvanceTrack wins two-year High Court battle over competitor’s Google Adwords trademark breach

It was Benjamin Franklin who once said “…nothing can be said to be certain, except death and taxes.”

Business owners know only too well the importance of dealing with taxes, but rarely think about or plan for how they will deal with the death of a business partner or shareholder.

As a nation, we’re not good at talking about death. So, it is hardly surprising that recent research shows that half of UK adults don’t even have a will. Yet, as Here Jen Goodwin, a solicitor in the corporate and commercial team at solicitors Jackson Lees explains as a business owner, failing to plan for death is a serious risk, not just to your family but also to your business.

As unpleasant as it is to think about, a responsible business owner needs to have considered what will happen to ownership of their business if they or a co-owner dies or becomes seriously ill while still active in the business. Indeed, it is healthy to include these issues as part of your business continuity and risk planning particularly when you consider a Legal & General survey which found that 59% of businesses believed that they would have to stop trading in less than a year after the death or critical illness of a key individual.

Aside from not wanting to think about the worst, one of the reasons more businesses don’t plan better around death or critical illness is because they wrongly assume that their families will automatically benefit from the value built up in the business in the event of their death, but that is not necessarily the case.

The default position is usually that shares in a company will pass to the estate of the deceased, leaving family members with shares and not cash, and surviving co-owners with new shareholders who often have little or no working knowledge of or interest in the company. It can be a less than ideal situation for both sides.

Yet, there is a simple solution to avoid this by having a cross-option agreement.

What are they?

A cross-option agreement is a contract between the shareholders of a private limited company and is a private document that does not need to be filed at Companies House. It gives the other shareholders the option to purchase the shares of a shareholder who is incapacitated or has passed away. This option allows the surviving shareholders to retain control of the business without having to introduce new shareholders.

The agreement will also provide the beneficiaries of a deceased shareholder (very often the spouse, children or other close family members) a similar option to require the surviving shareholders to purchase the deceased’s shares, just in case those surviving shareholders don’t exercise their own option to buy.

For those left behind, whether personally or professionally, it provides real peace of mind. For family members, it provides certainty that the demands of the business will not fall on them and for those left in the business, it provides clarity as to the business’s future.

Importantly, as the name suggests, cross-option agreements provide just that, options. The parties do not have to exercise their rights under the options. If neither the surviving shareholders nor the estate of the deceased exercise their rights then the shares will be inherited in accordance with the relevant will or intestacy rules and any applicable shareholders agreement, which might be particularly welcome in a family-run enterprise where one individual has been identified to take over from the deceased.

What is included?

The main elements of a cross-option agreement include the details of the shares eligible to be bought or sold, the rules around how the shares are to be valued (or if there is to be a fixed price) and a timescale as to when the transaction should take place and payments be made.

Valuing and paying for shares on death

Depending on the terms of the cross-option agreement, the shares may need to be independently valued. Some agreements contain a formula which might take into account market value and a multiple of profits. There will of course be tax implications for both sides in any sale and it is absolutely essential that both sides seek independent financial advice prior to entering into a cross-option and on exercising their option.

The cross-options are very often backed by an insurance policy taken out by each shareholder known as a shareholder protection policy. This is so that when an option is exercised, the purchasers have the cash available to buy the shares, otherwise they may need to fund the purchase price themselves or find a way for the business to fund it, which many will be unable to afford. This can leave a surviving shareholder in the very difficult position of being legally bound to purchase shares following exercise of an option by the estate, but without the money to be able to pay the purchase price.

These insurance policies are different to ‘key man’ or ‘key person’ insurance, which simply insure the business itself against the losses stemming directly from the absence of a critical person. Shareholder protection insurance pays out to the owners of the business for the sole purpose of acquiring the shares of the deceased or critically ill shareholder.

What else to think about?

At the same time as completing a cross-option agreement, you should also update your will to reflect what is in the agreement.

Just as important is to review and renew the cross-option agreement and any shareholder protection insurance every few years to make sure it still reflects the current business and value.

While you may not consider making such provisions for your business when you’re still young, fit and healthy a priority, considering a cross-option agreement could be a fundamental part of securing your businesses legacy.

Read more:
How to plan for the death of a business partner.

For a founder or seller, the sale of a SME business will be one of their key life events.  For a buyer it can be a springboard to a faster growth rate.  In recent months buyer and seller expectations have changed in relation to SME transactions.

Francis Dalton, Corporate Partner at national law firm Freeths, explains that :It is now taking an average of 12 months for transactions to complete leaving buyers and sellers in limbo.  In this article our Corporate experts identify some of the frequently occurring gaps between seller and buyer expectations in Small and Medium-sized Enterprise (SME) transactions and methods of addressing them to determine the best possible outcomes for both parties and to reduce transaction timetables.

Price

Price can often become the main point of disagreement during negotiations because the seller and the buyer rely on different approaches when valuing the business. Sellers have become accustomed to higher multiples and in some cases valuations based on future earnings.  As the economy has tightened, pricing from buyers has dropped and this has led to lower multiples.

Multiples

Multiples, which is a commonly used price metric, works on the basis that a company is worth several times its profits (EBITDA) or its revenue.

For some tech firms, revenue multiples (or annual recurring revenue) have been the basis of valuations as part of the market for a few years.  However, where these were once closer to 6 times, now they are more settled around 3 or 4.  For non-technology assets, it is more common to see a multiple based on EBITDA.  Again, these are sector specific but have reduced in recent years.

When choosing between profit-based and revenue-based multiples, it is crucial to consider the specific characteristics of the SME, the industry in which it operates, and the transaction context. Some additional considerations include:

• whether the SME has consistent and predictable profit margins, if it has then profit-based multiples may provide a more accurate reflection of its value. However, if profitability is low or volatile, revenue-based multiples may be more appropriate; and
• whether the SME is in a growth phase with significant revenue expansion potential, if yes, revenue-based multiples may better capture its future value. Conversely, profit-based multiples might be more suitable if the business has stable or declining revenue but is capable of improving profitability.

Working Capital Targets

Most transaction required that the Seller leaves the business with a normal of working capital in the business.  However, agreeing on what counts as a normal level of working capital is often a source of disagreement.  These disagreements typically arise due to differences in perspectives regarding the appropriate level of working capital that should be included in the transaction. For example, disagreements can arise regarding the treatment of cash, accounts receivable, inventory, or accrued liabilities and the period over which the target should be set.  In a recent transaction, this resulted in a difference in the price of over £1m and ultimately caused the transaction to fail.

When a disagreement in relation to the working capital targets occurs, it is important to have clear and open communication between the parties. Efforts should be made to understand each other’s perspectives and work towards a mutually acceptable resolution.

Earn-out provisions

Earn-out provisions are often used to bridge valuation gaps and align the interests of the buyer and seller as these are payments usually contingent on the business’s future performance.  Of course, a buyer will look to put as much of the overall consideration as contingent on the businesses’ future performance as possible whereas sellers will want more money up-front.

It is generally advisable to exclude the impact of uncontrollable external factors from earn-out provisions. For example, economic downturns, changes in industry regulations, or unforeseen market conditions can significantly affect business performance. Excluding these factors from the earn-out calculations ensures that the outcome is based on the performance within the control of the buyer or, more commonly, a seller/founder who is remaining in the business.

Earn-out provisions should be designed to focus on the performance of the specific business being acquired rather than general market conditions. Both parties should agree that earn-out provisions should not be subject to financial engineering or accounting manipulations. This ensures that the earn-out payments are based on the genuine performance of the business rather than artificially inflated or manipulated financial figures.

Earn-out provisions should be drafted with clarity and precision to avoid ambiguity or misinterpretation. Clear definitions of performance metrics, milestones, and calculation methodologies should be included to minimize the potential for disagreements and disputes in the future.

It’s worth noting that the specific exclusions or considerations for earn-out provisions can vary depending on the unique circumstances of the transaction and the preferences of the parties involved. It is strongly recommended that both the buyer and seller consult with experienced professionals, such as legal advisors, to ensure that the earn-out provisions are fair, balanced, and accurately reflect the intentions of both parties.

Liability Caps

In SME transactions, a seller will make a number of promises about the state of the business to the buyer (known as warranties).  In the event that the these are untrue, the seller will be liable to the buyer for the loss.

It is normal for this loss to be capped but the level of this cap is a point of contention.  Historically sellers have got used to caps of 20%/30% of the consideration whereas buyers will want to make sure that they have protection for the entire consideration amount.

Ultimately this will come down to how comfortable a seller is with the business that they are selling.  Many sellers will say that they know their business and are comfortable giving the warranties.  In other circumstances, the parties may seek warranty insurance protection to bridge the gap.

Basis Liability

In SME transactions involving multiple founders or shareholders, the allocation of liability can be structured in different ways. Two common approaches are joint and several liability and several and proportionate liability.

Joint and Several Liability

Joint and several liability means that each founder or shareholder is individually responsible for the full extent of the liabilities of all founders. In case of a breach or financial obligation, any one founder can be held fully liable for the entire amount, even if other founders are unable to fulfil their share of the liability. If one founder has the means to satisfy the liability, it ensures that the affected party can recover the full amount owed. This approach can provide a stronger level of protection for the buyer but it can seem unfair to sellers who don’t feel that they should cover the liability of their co-founders.  However, where a buyer insists on this approach the co-founders are able to regulate the position through an agreement between themselves.

Several and Proportionate Liability

Several and proportionate liability means that each founder or shareholder is responsible only for their respective share of the liabilities based on their ownership or agreed-upon proportion (i.e. if they have 30% of the shares they are liable for 30% of the claim).  This approach is preferred by sellers but it can leave Buyers exposes of required to bring claims against a number of people which is costly and time and consuming.

• The choice between joint and several liability and several and proportionate liability depends on several factors, including the specific circumstances of the SME transaction, the relationship and trust among the founders, the financial capacity of individual founders, and the preferences of the parties involved. In some cases, a middle ground can be reached by incorporating a combination of both approaches. For example, certain liabilities may be subject to joint and several liability, while others may be subject to several and proportionate liability.

Next Steps

In conclusion, bridging the gap between seller and buyer expectations in SME transactions requires a win-win approach. Both parties must be willing to compromise on key issues and understand each other’s positions to arrive at a mutually beneficial agreement. With proper preparation and open communication channels, the likelihood of a successful deal increases. It is important for both seller and buyer to consult with legal professionals who specialise in corporate law and SME transactions due to the complexities and potential risks involved. If you have any questions relating to a SME transaction or you’re contemplating embarking on a sale or acquisition, please get in touch with Francis Dalton.

Read more:
How to bridge the gap between Seller and Buyer expectations in SME transactions?

Mounting Employment Tribunal backlogs are causing major delays in dealing with ongoing claims, leading to additional pressures for businesses and claimants, according to a leading employment lawyer.

Tim Jones, Head of Employment Law at Higgs LLP, said the Employment Tribunal continued to suffer severe delays due to the amount of claims being issued and insufficient resources to meet that demand.

Calling for a “whole system reboot”, he warned the delays caused by pandemic only served to exacerbate the underfunding in the Tribunals Service.

“The process can be painfully slow at the moment,” said Tim. “I am advising on a fairly straightforward disability discrimination case currently and the preliminary hearing was due in May. That has been postponed until November when we’ll get directions, with the hearing likely to be well into 2024.

“It’s partly a Covid hangover but it’s also the consequence underfunding. The Government has invested into the Employment Tribunal system to try and clear the backlog, but that is a drop in the ocean, really. The whole system needs a re-boot.”

Higgs has taken an in-depth look at Employment Tribunal data for 2023 and over the last 10 years. Read the report here.

According to figures released by HM Courts and Tribunals Service (HMCTS), the Employment Tribunal backlog is still increasing. In 2022, there were 50,518 cases – a new record and an increase of 3,477 on 2021.

But Tim has also raised concerns about the number of hearings that are still being heard virtually and called for more hearings to be held in person again.

Employment Tribunals were traditionally held in person and in public and judgments published on an online register, but the growth in virtual hearings risks the principle of open justice.

“The vast majority of hearings are still taking place online, with only the more complex cases taking place in person,” said Tim. “While theoretically members of the public and journalists can log on and listen, there are questions around how they know the hearings are taking place and how they obtain access.

“This opens a debate about access to justice. In my opinion, we have an opportunity to reflect. Are these changes for the best and do they comply with protocol and policy? Are they working well?”

Rules state that a hearing can take place online if the Tribunal considers remote would be ‘just and equitable’ and all concerned – those participating and members of the public – can see and hear everything that is happening.

Simple case management hearings to strike-out hearings and even some final hearings are all being heard online, and it’s likely that all preliminary hearings will default to remote.

Tim added: “There are many good aspects to remote hearings, such as reduced travel and costs for those involved. It also helps avoids last-minute adjournments if judges aren’t available in-person and can be less dauting for witnesses, as well as improving access for those with disabilities.

“However, remote hearings can be more difficult for some people, such as the deaf and those who struggle with technology, whether that’s obtaining it or using it.

“But perhaps the biggest concern is integrity. When hearings are held remotely it is far more difficult to police what assistance that person might be receiving off-camera, or what papers they may have in front of them.

“Video hearings have a part to play – but in-person is still the gold standard.”

Higgs analysis has shown that so far this year, the largest number of employment tribunal cases involve the unauthorised deduction from wages, which happens when an employee has either been unpaid, underpaid, or paid late. Between January and March this year, 7420 cases were lodged with the Tribunals Service.

The second most common type of complaint this year is breach of contract, with 6037 cases lodged in the first three months of 2023, while in third place is working time directive cases, which occur when an employee is aggrieved to be working over the legal limit of 48 hours a week on average, with 5982 complaints.

Employment Tribunals are used to settle workplace disputes between employees and employers that cannot be resolved through conciliation, negotiation or mediation, where an alleged breach of employment law has occurred.

The cases for which Employment Tribunals are best known are probably unfair dismissal and redundancy claims. While these do make up a significant proportion of all complaints, tribunals deal with a wide breadth of issues including disability discrimination, sex discrimination and equal pay.

Cases are decided based on employment law, most commonly in line with the Employment Tribunals Act 1996, the Employment Rights Act 1996 and the Equality Act 2010, though other legislation is considered. The Tribunal has the power to award compensation or other remedies if the employer is found to have acted unlawfully.

Read more:
Employment Tribunal system needs ‘whole system reboot’

All directors have responsibilities under the Companies Act 2006, but many lose sight of what is required when they’re in the thick of running a business.

Worse still some don’t even realise what is expected of them, Charlotte Mills, a director and head of the corporate and commercial team at Jackson Lees examines.

A company director has many duties and wears many hats so can find themselves dealing with all manner of day-to-day issues. Despite this, a director must also ensure that the company complies with the law, files its accounts and annual confirmation statement at Companies House, as well as maintain its solvency.

Anyone attracted by the job title and status should think long and hard about taking on the role. Holding office as a director might sound prestigious but is a serious commitment. Failing to act in accordance with certain rules won’t just damage the company but can lead to personal liability or even criminal charges, meaning you have much to lose if you fail to take your duties seriously.

In addition to wider fiduciary duties (like acting honestly and in good faith) and regulatory responsibilities (like health and safety and environmental compliance), there are seven main duties that a director must adhere to under the Companies Act 2006, namely:

Act within powers

A director of a limited company must act in accordance with the company’s constitution, but many don’t know what it contains, let alone where to find it!

A company’s constitution, or ‘Articles of Association’, details the rules on how the business should be governed and operated. It is a statutory requirement that all registered companies have.

If you’re not familiar with yours, visit the Companies House website as there will be a copy there and it should be easily accessible against your company’s online file.

Promote the success of the company

The Act states that directors must have regard (among other matters) to the following:

• The likely long-term consequences of any decision.
• The interests of the company’s employees.
• The need to foster the company’s business relationships with suppliers, customers and others.
• The impact of the company’s operations on the community and the environment.
• The desirability of the company maintaining a reputation for high standards of business conduct.
• The need to act fairly between members of the company.

The courts do not expect directors to be guarantors of a company’s success. The statutory obligation is that directors act in the way they consider (not what a court may consider) would be most likely to promote the company’s success for the benefit of its members as a whole.

The courts recognise that directors are in control of an entrepreneurial venture and that a degree of commercial risk-taking is a necessary part of a business’s success. Further, it has long been accepted that directors are not liable for mere errors of judgment.

While a court may relieve directors from liability if they acted honestly and reasonably it will only do so if, in its opinion, they ought fairly to be excused. Prudent directors will therefore take every reasonable step to prevent liability arising.

Holding regular board and other management meetings and reviews, accompanied by clear minutes, are the best evidence of the steps directors took, and why.

Exercise independent judgment

A director must not let their powers as director be controlled by others. This doesn’t prevent directors from relying on advice from others as long as they exercise their own judgment as to whether or not to follow that advice.

Exercise reasonable care skills and diligence

A director must exercise their duties diligently, performing their role to a high standard. A director must perform to the best of their ability and accept the responsibilities and expectations associated with the role.

Avoid conflicts of interest

A director must not, without the consent of the company, place themselves in a position where there is a conflict or possible conflict of interest. Directors should always disclose any potential conflict.

This issue often arises in family-run businesses, and it is important directors do not lose sight of their obligations. I am aware of a case of three shareholders, an elderly woman who had inherited her husband’s share and his two brothers who didn’t involve her. The brothers were taking the business opportunities they received from that company and passing them onto another competitor company they had set up. This is a clear conflict of interest and is certainly not acting in the best interests of the company they own with their sister-in-law.

This duty also doesn’t stop on termination of the director’s appointment with respect to the exploitation of property, information, or an opportunity that they became aware of whilst holding office.

Not to accept benefits from third parties

A director must not accept benefits in connection with their role from people other than the company (or a person acting on behalf of the company).

For example, if you are about to enter talks to work alongside another company, you must be mindful not to take any inducements such as gifts or financial payments from the other party.

Again, this applies after a person ceases to be a director in relation to the things done or omitted to be done by them before the directorship ended.

Declare an interest in a proposed transaction or arrangement

Directors must declare to other directors the nature and extent of any interest (direct or indirect) in a proposed transaction or arrangement with the company, prior to the company entering any such transaction or arrangement.

An interest doesn’t necessarily mean a conflict but flagging it at the outset allows your fellow directors to make an informed decision and ensures you have complied with your duties.

Becoming a company director puts you in a position of responsibility and while there might seem like a lot to consider, this guidance represents good, honest business practice and should not be onerous.  The law is there to guide you.

Read more:
Are you a fit director?

General Data Protection Regulation (GDPR) established by the European Union is a formidable legal framework designed to regulate the processing and transfer of personal data across member states.

According to the data analyzed by the Atlas VPN team, companies had to pay over €1.5 billion in GDPR fines through the first half of 2023. On May 25th, GDPR celebrated its 5th anniversary. Throughout this time, businesses received 1679 fines combining to a sum of nearly €4 billion.

January and May were particularly noteworthy, with nearly €400 million and €1.2 billion in fines, respectively. Interestingly, both months saw fines issued against Meta Platforms which control Facebook, Instagram, WhatsApp, and other apps.

Although March only saw €1.5 million in fines, it was the month when businesses received the most penalties for data violations, with a total of 46 penalties issued.

February was the month with the least amount of fines issued in H1 2023, with only 34 fines accounting for €2.6 million in penalties. Overall, businesses received 237 fines throughout the first half of 2023.

​​Cybersecurity writer at Atlas VPN, Vilius Kardelis, shares his thoughts on GDPR enforcement: “The GDPR fines are significantly impacting how businesses operate and handle data. Companies must prioritize data privacy and security to avoid potential fines and reputational damage. As we move forward, companies must continue investing in their data protection strategies and staying informed about any updates or changes to the GDPR.”
Countries with most GDPR violations

As we delve into the topic of countries with the most GDPR violations, it’s important to note that no country is immune to data privacy issues. However, some countries have had more violations than others.

Since the start of GDPR, Spain has accumulated 689 fines resulting in over €60 million in penalties. While the average of each fine is about €88K, Spanish businesses received more than 2 times the amount of fines than any other country.

Italy’s data protection authorities have issued 284 fines, totaling €133 million in penalties. The average fine here is about €468K. Germany has received the third-highest number of violations, totaling 160. These fines have resulted in penalties of €55 million.

Romania is the last country whose authorities have issued over 100 fines in the 5 years of GDPR’s existence. In addition, Romania has a very low average penalty of only €5390. Greece stands out from the rest of the countries with a high average per fine of €525K.

Read more:
GDPR fines hit €1.5 billion in first half of 2023

After losing the argument over Gary Lineker’s employment status, HMRC plans to appeal the ruling at the Upper Tribunal

The First Tier Tribunal ruled in favour of Lineker in March this year, after he appealed a tax demand from HMRC for unpaid tax of £4.9m related to earnings between 2013 and 2018 for TV presenter work for the BBC and BT Sport.

In total, HMRC is pursuing Lineker for £3,621,735.90 in income tax and £1,313,755.38 in national insurance contributions (NICs).

The litigation involved the IR35 intermediaries legislation which is designed to clamp down on contractors who charge for their services through personal service companies.

Lineker provided his services via a partnership through Gary Lineker Media LLP and this type of arrangement was not covered by the IR35 rules. Unless the rules are changed retrospectively it would seem unlikely that HMRC could win the argument.

At the First Tier Tribunal, Judge John Brooks said: ‘As a matter of law when Mr Lineker signed the 2013 BBC contract, the 2015 BBC contract and the BT Sport contract for the provision of his services, he did so as principal thereby contracting directly with the BBC and BT Sport.

‘As such, the intermediaries legislation cannot apply – it is only applicable ‘where services are provided not under a contract directly between the client and the worker’. In this case, Mr Lineker’s services were provided under direct contracts with the BBC and BT Sport.’

Read more:
HMRC to appeal Gary Lineker IR35 case

According to Sky News, Cineworld’s London-listed holding company is preparing to file for administration before the month end as a part of an extensive global financial restructuring plan.

In recent years it has suffered from a potent mix of a debt fuelled acquisition, the rise in online streaming services and the COVID-19 pandemic. Cineworld filed for Chapter 11 bankruptcy protection in the US last Autumn, hoping to restructure its massive debt.

Kerri Wilson, Senior Associate, Ontier LLP   explains that it is expected the administration process in the UK will see the transfer of ownership of the company to its lenders but that operations at its 128 UK cinema chain will be unaffected.

What can other businesses learn from Cineworld’s journey?

Don’t overdo the debt

Without doubt the acquisition of US Regal Cinemas in the US in 2018, whilst ambitious, played a part in Cineworld’s fate. There was no way Cineworld could have predicted the global economic disruption which would follow with the COVID-19 pandemic 2 years later. However, there was earlier reason for concern about its financial health, including a 23% crash in share price in June 2019, given the company’s significant debt and lease liabilities.  In fact, by November 2019, Cineworld was the most shorted business in the UK meaning financial institutions were betting on Cineworld’s shares losing value.

Arguably management ignored the warning signs even proposing a further acquisition of Canada’s Cineplex Entertainment which was abandoned when the pandemic struck.

Smell the coffee

The COVID-19 pandemic significantly affected the Group’s results, with all sites across the Group closed for a period in 2020 and takings severely down thereafter. In its Annual Report and Accounts published April 2021, the Group recorded a revenue drop of 80.5% down on the previous year and an operating loss for the first time in its history. 2021 proved slightly, although not much, better with further losses yet again.

This begs the question – should Cineworld have acted sooner? Although there is no correct answer to this, restructuring a business sooner rather than later is always the best route.

Restructuring route

Even though Cineworld is under Chapter 11 protection in the US, it will need to file separately for administration in the UK. The intention behind the administration is, we understand, to facilitate the transfer of ownership of the company to its lenders via a debt for equity swap. This results in the debts/obligations of the company being exchanged for something of value and writes off money owed to creditors.

Why choose administration?

Administration can, potentially, save a business. It affords the company an opportunity to restructure or realise its assets while being protected by a statutory moratorium, preventing creditors from enforcing their claims against the company. You could say the company is placed in a safety bubble, giving an administrator breathing room to see what can be done to rescue the company or achieve the best results for the company’s creditors.

Next steps

The company’s administrator, an insolvency practitioner, takes control of the company’s business and assets from the company’s directors. The administrator is then required to achieve one of the following statutory purposes of administration, namely:

1. rescuing the company as a going concern;
2. achieving a better result for the company’s creditors as a whole than would be likely if the company were to be wound up; or
3. the realisation of some or all of the company’s property to make a distribution to one or more secured or preferential creditors.

Unlike liquidation, which puts an end to a company, Administration is a temporary process, hopefully ending with a much stronger company.

We saw other household name companies such as TM Lewin, Sofa Workshop, Joules, Made.com and Misguided fall into administration last year. Most have been saved in smaller form by new owners, although with a challenging economic outlook ahead it is perhaps still too soon to vouch for their long term future.

For Cineworld, the plan is that the restructured company will be taken forward by new management, with reduced indebtedness and a rights issue designed to place the company on a more sustainable financial footing.

Read more:
Lessons from Cineworld’s restructuring?

A startling statistic recently surfaced from the Office for National Statistics – despite 77% of unemployed autistic people being eager to work, only 29% are currently employed.

Hopefully, this figure will improve following the Government’s recently launched Buckland review, an initiative to improve employment prospects for autistic individuals.

You might wonder, ‘Why should this matter to me as a business owner?’. It matters because you could be missing out on a wealth of untapped talent.

Top-tier employers like EY, JP Morgan Chase, SAP, and Autotrader have long recognised and reaped the benefits that neurodiverse employees bring to their teams. For instance, an internal analysis by JP Morgan Chase highlighted their autistic employees’ output was equal in quality but 48% more productive than their neurotypical counterparts.

Understanding the Buckland Review

Sir Robert Buckland is leading the review with support from the Department for Work and Pensions and Autistica, a renowned charity. His recommendations are expected in September 2023, and the review will examine the following:

• Ways to identify and support current autistic employees;
• Techniques to prepare autistic individuals to join or return to work;
• How to adapt work practices and initiatives to reduce stigma and boost the productivity of autistic employees.

What does this mean for you, the employer?

You are not just an observer in this process. The review encourages employers to re-evaluate their workplaces, identify potential barriers, and innovate their ways of working. The potential benefits are enormous:

• Autistic individuals get a supportive platform to flourish and reach their potential;
• Employers gain a competitive edge by benefitting from autistic individuals’ strengths and perspectives;
• Collectively, we boost the economy.

Navigating Autism and the Law

Autism is a spectrum condition affecting each individual differently. The condition is lifelong, and if it “has a substantial and long-term adverse effect” on an individual’s “ability to carry out normal day-to-day activities”, it will amount to a disability under the Equality Act 2010. Accordingly, employers must make reasonable adjustments where they know (or could reasonably be expected to know) that the individual has a disability and is likely to be placed at a substantial disadvantage compared to others who do not have a disability.

Empowering Autistic Employees: A Practical Approach

The path to inclusivity begins at the recruitment stage. Here are some simple steps you could take:

• Write clear, simple job descriptions with the necessary skills specified and consider using images;
• Engage with candidates pre-interview, offering necessary adjustments;
• Consider alternative interview formats like practical tasks or work trials;
• Be flexible with interview environments – offer online interviews, and provide quiet spaces;
• Ask questions sequentially during interviews to prevent information overload.

Support doesn’t stop at recruitment. During employment, engaging in regular dialogue with autistic employees and providing necessary training to neurotypical colleagues can foster a healthy and inclusive work environment.

For example, while hot-desking is a modern trend, it might unsettle an autistic individual. So be prepared to offer alternatives like allocated desks and consider developing a neurodiversity policy.

We eagerly await the results of the Buckland review, but in the meantime, these are tangible steps you can implement to support neurodiverse employees and boost your business.

Seek Support: We’re in This Together

To ease your journey, numerous support networks are available to help employers, such as the National Autistic Society and Autistica. They offer invaluable guidance on best working practices and can advise on becoming a more inclusive employer.

Remember, by embracing neurodiversity, you’re not just creating employment opportunities but opening your business to untapped potential and creativity.

Read more:
Unleashing Potential: Improving the employment prospects of autistic people

Fast fashion is characterised by mass-producing cheap clothes that replicate current catwalk trends. Therefore, the fast fashion sector is driven by a never ending demand for fresh ideas – influenced by the latest trends.

However, a growing number of designers are accusing companies such as Shein, H&M, and Pretty Little Thing of stealing their designs and committing copyright infringement.

As Philip Partington, Partner in Intellectual Property at JMW Solicitors explains It is a long-standing practice for fast fashion companies to draw inspiration from leading industry names, and in certain instances, to replicate specific clothing items. This enables these companies to provide fashionable clothing at lower prices than their designer counterparts, albeit existing in a legal grey zone with occasional overstepping of boundaries.

Replicating popular trends is one thing, but some independent designers have recently suspected fast fashion brands of directly taking their work to sell it, or replicating unique designs that warrant copyright protection. Here, we clarify the components of a design that qualify for protection, the various legal aspects involved in copyright infringement cases in the fast fashion sector, and how smaller businesses or designers can protect their work from infringement.

Is the fast fashion sector violating the law?

Fast fashion flourishes by deriving inspiration from popular designs – or sometimes reproducing them directly. This has always been the norm, leading to numerous allegations of intellectual property infringement over the years. Companies such as Forever 21, Fashion Nova, ASOS, and Shein have all faced legal proceedings for copyright and trademark infringement when their designs resembled those of prominent designers. Despite this, the practice continues and may be entirely legal in many situations.

Several factors influence the legality of imitating a design and it can be something that is difficult to define. The primary factor being the limitations of copyright rules in extending protection to artistic works. In the context of apparel, copyright protection only applies to specific design elements that are unique. Anything related to a garment’s function, like the shape of a t-shirt, is not eligible for protection, as it is neither distinctive nor original to a single product.

A unique pattern or colour scheme that characterises an item may be eligible for legal protection, though not always. For instance, while the iconic red-soled shoe is widely associated with designer Christian Louboutin, a French court ruled in 2012 that a Zara imitation did not infringe on the designer’s intellectual property rights.

There are no definitive guidelines for applying this principle, however, and it can be ambiguous. Consequently, it is crucial to consult an intellectual property lawyer for advice before making a decision. With their expertise, they can help determine whether your intangible assets – including designs, logos, company and product names, and more – infringe upon someone’s intellectual property rights. They can also assist you in registering your intellectual property and monitoring for infringement by others to ensure that your assets remain protected.

The fast fashion sector often capitalises on this ambiguity, enabling businesses to emulate high-fashion trends without infringing copyrights by closely reproducing original works within the limits set by copyright law.

How can smaller designers react?

The fashion industry’s constant need for innovation has prompted designers to explore a broader range of sources for inspiration. In some cases, this has involved smaller designers whose work garners attention on social media platforms like Instagram.

The most crucial step to take if you are concerned about potential infringement of your work – whether you are a small designer or a multinational corporation – is to understand how copyright law applies in such situations. This will enable you to identify instances of copyright infringement (as legally defined) and take appropriate action.

How can I identify copyright or trademark infringement?

As previously mentioned, it is often legal in the fashion world for businesses to emulate designs, hence, while many designers may feel their rights have been violated, this is not always legally accurate. Using the example of a t-shirt featuring a cactus illustration, we will demonstrate the various intellectual property rights that may apply.

Firstly, the concept of decorating a clothing item with a cactus cannot be protected. Intellectual property laws govern the expression of ideas, not the ideas themselves. Thus, anyone is free to design a t-shirt with a cactus on it without infringing upon someone else’s IP rights.

A cactus image would likely be ineligible for trademark registration unless it was altered in some way to make it unique. For example, a cactus design that incorporated a company logo or was arranged into a distinctive shape might qualify for trademark registration. However, without advice from an intellectual property lawyer, it can be challenging to determine the eligibility of a specific mark.

If you successfully registered a trademark for your cactus image, it would be illegal for someone else to print a design with the same cactus or one that was sufficiently similar. However, you should also ensure that your design does not infringe upon any existing trademarks. If someone else already owns a similar cactus as a registered mark, you would be guilty of infringement by selling your design.

An illustration or photograph of a cactus is protected by copyright. This means that it would be illegal to produce a design featuring a specific cactus image, unless:

• You created the image yourself
• You hired someone else to create the image
• You have purchased or licensed the rights from the creator
• The image was published under an open licence

In many instances, it would also be illegal to recreate the image or produce a similar version. If you wish to create clothing items featuring a particular piece of artwork, consult an intellectual property lawyer about the possibility of licensing the copyright to the image you want to use.

How can designers safeguard their intellectual property rights?

The most effective way to protect your intellectual property rights is to register any eligible assets as trademarks and monitor for infringement. Intangible assets, such as a logo, company name, or even design elements common in your work, may qualify for protection. This can ensure that you have the legal right to combat infringement. If you sell in multiple territories or markets, you may need to register your intellectual property in each area separately, as these rights only apply to specific jurisdictions.

Unlike trademarks, copyright protection applies automatically, and there is no need to register. Another distinction is that copyright law generally applies internationally, which means that you may be able to take action even if your work is infringed upon outside of your home jurisdiction.

Read more:
How common is copyright infringement in fast fashion?

More and more employers are taking action to support staff going through menopause.

This is partly due to high-profile campaigns from trade unions and celebrities; it’s also because menopause affects such a significant section of the workforce that it’s become impossible to ignore.

In fact, around 13 million people are currently peri or menopausal in the UK, equivalent to a third of the entire UK female population. But it is important not to fall into the trap of thinking that menopause only affects older female staff.

This issue affects a wide range of the workforce in terms of age because someone may experience premature menopause, medically induced (temporary) menopause or surgical menopause. In addition, the issue also affects transgender, non-binary and inter-sex staff.

Many employees sadly maintain silence around their experiences of menopause. This is partly due to a fear of ageism and losing their jobs or status if they admit to some common consequences of menopause, including brain fog and hot flushes.

Cost of Menopause to business and the economy

Women over 50 are the fastest-growing group in the workforce, and many are highly skilled and at the peak of their careers.

Research by the CIPD in 2021 found that six in ten working women experiencing menopause said it negatively impacted them at work. In addition, one in ten women leaves their job because of menopausal symptoms, while one in five women do not seek the promotion they deserve because of a loss of confidence linked to their menopause transition. Consequently, there are potential knock-on effects on the gender pay gap, the pension gap and the number of women in senior leadership positions.

The legal position

Menopause is not a “protected characteristic” in the Equality Act 2010. Earlier this year, the Government confirmed it would not be making any changes to the Act, and menopause would not become a new “protected characteristic”, which was disappointing for those who had campaigned for that change. The Government believes that the existing protected characteristics of sex, age and disability already protect against discrimination and harassment due to menopause.

What are my legal duties as an employer?

Employers have a legal duty to prevent workplace discrimination and harassment. Employers also have a duty to protect their employees’ health, safety and welfare and assess workplace risks. If the individual has a disability, the obligation to make reasonable adjustments may arise.

How can I best support staff going through menopause?

Many responsible employers are already taking steps to break the taboo and support staff going through menopause by encouraging open conversations, covering menopause during the induction processes and appointing workplace menopause champions. Others have implemented a menopause policy and held regular training sessions to educate staff. Employers can also look at adjusting sickness policies to address menopause-related absences.

For example, policies with “trigger points” (when several short-term absences trigger a performance review or disciplinary action) have a particular impact on menopausal employees.

Other proactive approaches can include setting up informal support networks such as menopause cafes and signposting to further support for those experiencing debilitating symptoms.

Some employers already provide access to menopause clinics and app-based services. Other measures may include more flexible working, such as changing shift patterns and altering start times.

Employers can also improve the working environment for people experiencing menopause. Such measures can include providing access to fans and good ventilation to help combat hot flushes, the ability to control workplace temperature and making adjustments to staff uniforms which may cause discomfort.

Extensive guidance is available for employers from organisations including ACAS, CIPD, Over the Bloody Moon, Menopause Support and Menopause Matters UK.

There are many benefits for employers in taking a more proactive approach towards menopause. By fostering safer and fairer workplaces for people working through menopause, employers are more likely to retain the talents of experienced and skilled workers while boosting morale and well-being in their team.

Read more:
How employers can support staff going through menopause

The owner of a pet hotel has said she faces bankruptcy if she loses a libel claim for lashing out at a dressage rider on Facebook over a dead pony.

Andrea Oldham posted comments that described Beth Wood, a professional dressage rider, trainer and stables owner, as “vile” and “a disgrace to loving horse owners”.

Oldham, who runs a pet hotel and dog walking business, made the comments after a pony named Lily was spotted lying dead in a field in 2020. She also posted a description of the scene written by another user on Wood’s business page, along with a series of comments that the horsewoman has said amounted to a “hate campaign”.

Wood, who has competed internationally, acknowledged that Lily had died in the field, but denied that the animal was not properly cared for. She is suing Oldham in the High Court in London for £15,000 in damages. Wood also wants a judicial order for the comments to be taken down and to prevent similar allegations from being repeated.

Oldham has told the court that she will defend her comments, arguing that her posts were true or an expression of her honest opinion. However, she has told a judge that the cost of the litigation has brought her to “the cusp of bankruptcy”.

In written submissions, lawyers for Wood, who lives in Stoke-on-Trent, said that she had an exemplary professional background in the equine industry, dating back to her childhood.

Wood’s legal team noted that she competed professionally in shows and dressage. She is said to have shown many horses and ponies at international level competition and to have competed in advanced level dressage.

Her lawyers also told the court that Wood cared for some of her clients’ horses as well as her own.

Wood is said to have found one of the ponies lying in the mud on a late afternoon in 2020. According to her lawyers, Wood determined that the animal had died and contacted a fallen stock business, SJ & JM Weston, to remove the pony and prevent it from being attacked further by the birds and the elements. Wood is then said to have contacted the owners of the pony.

The fallen stock specialist is said to have identified that the pony had died from natural causes, that “there were no signs of a cruel standard of living”, and to have “proposed that the death had only occurred within the previous six hours”.

Wood’s lawyers told the court that Oldham, who lives in Congleton, Cheshire, left a series of Facebook messages to her own clients. One said: “Be absolutely sure that you want this vile person training your horse. If she leaves her own to die and decompose then imagine what she is doing to yours.”

In another, she wrote: “She is an absolute disgrace to loving horse owners and animal lovers.”

It has been argued that the posts created a false picture of Wood as “a vicious and cruel woman who . . . is unprofessional and unfit to look after animals” and that Oldham intended to start “a hate campaign” against her.

Oldham’s lawyers have told the court that she is relying on the defence of “truth” in relation to the initial post and a defence of “honest opinion” in relation to the other posts.

The judge, Master Mark Gidden, has ordered the pair to try to resolve the dispute outside of a full trial to avoid a financially ruinous court fight. If they cannot reach a settlement the case will return to court for trial at a later date.

Read more:
Businesswoman ‘facing bankruptcy’ after being sued for Facebook libel

UK tech tycoon Mike Lynch lost his bid to appeal his extradition to the US to face criminal charges over the Hewlett Packard sale.

The Autonomy Corp. founder had tried to block his transfer to the US after the British government approved the move in January 2022. This followed a separate court judgment that he was dishonest in the $11 billion sale of his company.

None of the grounds of appeal were arguable, judges Clive Lewis and Julian Knowles wrote in a ruling Friday.
Lynch, who denies all the charges, had argued that the case belonged in the UK and could have been fully investigated by British authorities. Spokespeople for Lynch did not immediately respond to calls and emails requesting a comment.

It’s the latest chapter in a legal saga that began shortly after the 2011 sale of Lynch’s Autonomy to Hewlett Packard. A year after the sale, the Silicon Valley hardware giant wrote down the value of the deal by $8.8 billion.

Lynch, had been seeking to appeal on five grounds, with his main argument being that the criminal case against him should be in the UK where the bulk of the events allegedly occurred.

“These matters belong firmly in the UK,” Alex Bailin, Lynch’s lawyer, said at the hearing. “Extradition is not in the interest of justice and the allegations can fairly be tried here.”

It’s the latest chapter in a legal saga that began shortly after the 2011 sale of Lynch’s Autonomy to Hewlett Packard. A year after the sale, the Silicon Valley hardware giant wrote down the value of the deal by $8.8 billion.

Bailin said that the UK’s Serious Fraud Office has “expressly reserved” its rights to prosecute Lynch in the UK if the extradition is refused. This is despite the SFO previously opening an investigation and closing the case without any charges.

The US government opposed the application to appeal. Its lawyers said that the “USA was integral to all aspects of the alleged fraud” and that the extradition should proceed as it was predominantly US-based shareholders who were victims of the fraud, according to court documents prepared for the hearing.

Speaking about the case, Thomas Garner, partner and extradition lawyer at law firm Fladgate: “Lynch appears to have reached the end of the road.  It is difficult to see the Strasbourg Court intervening in this case and it should be remembered that any application to Strasbourg can only be founded on narrow human rights grounds – much of his argument in the UK was that the US was not the proper forum for any trial.

 If an application is made to Strasbourg then he can also seek an order effectively injuncting his removal to the US – such orders are very rare and are typically reserved for cases in which the Court is concerned that there is an imminent a threat to life or ill-treatment amounting to torture or inhuman or degrading treatment.”

Read more:
UK tech tycoon Mike Lynch loses bid to block US extradition

Twitter boss Elon Musk has threatened to sue Microsoft as he accused the technology giant of using data from his social media company without permission.

“They trained illegally using Twitter data. Lawsuit time,” the multi-billionaire said in a tweet.

Read more:
Elon Musk threatens to sue Microsoft over Twitter data

Tesco may have to stop using a blue and yellow logo to promote its Clubcard loyalty scheme after the High Court ruled that it had infringed the trademark of Lidl, the German discounter.

Judge Joanna Smith said in a written ruling that Britain’s biggest grocer had taken unfair advantage of its rival’s “distinctive reputation” for low prices.

Smith also ruled that Tesco was “deceiving a substantial number of consumers into believing that Tesco’s prices represented the same value as Lidl’s prices, when that was not the case”. She rejected Lidl’s argument that Tesco had “the deliberate subjective intention of riding on Lidl’s coat-tails”.

The judge wrote: “I agree with Lidl that . . . the effect of the use of the [Clubcard logo] was to cause a ‘subtle but insidious’ transfer of image from the [Lidl logo] to the [Clubcard logo] in the minds of some consumers. This will have assisted Tesco to increase the attraction of their prices.”

Smith will now order an injunction against Tesco, requiring it to stop using the Clubcard logo. Tesco said it intended to appeal against the ruling.

Lidl sued Tesco in 2020 shortly after its rival adopted the logo to promote its “Clubcard Prices” discount scheme. The two companies traded allegations at a trial in February, which took place amid a price war between traditional supermarkets and their discount rivals.

Lidl had argued that Tesco had deliberately copied its trademark to deceive customers into thinking its prices were comparable, while Tesco’s lawyers accused Lidl of hypocrisy and said it had copied the branding of well-known products, such as Oreo cookies

Lidl GB said: “Tesco has been using its Clubcard logo to deceive many customers into believing that Tesco was price-matching against Lidl. This infringement allowed Tesco to take unfair advantage of our longstanding reputation for great value.”

Tesco said: “The judge’s ruling concluded that there was no deliberate intent on Tesco’s part to copy Lidl’s trademark.”

Read more:
Tesco ordered to drop Clubcard logo after High Court rules it copied Lidl

Technology companies have renewed their attack on proposed laws that would force them to identify child sexual abuse in encrypted messages.

The bosses of WhatsApp and its rival Signal have co-signed an open letter warning that the plans, contained in the Online Safety Bill, will open the door to “indiscriminate surveillance”.

The bill would give the regulator, Ofcom, the power to order companies to use technology to identify illegal material on encrypted services.

The technology has not been stipulated, however, and the companies argue that there is no way to break encryption while retaining privacy. Similar online safety legislation in Europe defends encryption for messaging services. The government says the order would be used only in “appropriate and limited circumstances”.

End-to-end encryption, which is used by WhatsApp, Signal and similar messaging services, prevents anyone but the sender and receiver from seeing the contents of their communication.

The tech bosses write in their letter: “As currently drafted, the bill could break end-to-end encryption, opening the door to routine, general and indiscriminate surveillance of personal messages of friends, family members, employees, executives, journalists, human rights activists and even politicians themselves, which would fundamentally undermine everyone’s ability to communicate securely.”

Signal has said that it would prefer to stop its service in the UK rather than comply with the measures while WhatsApp has threatened non-compliance. The companies face fines of up to 10 per cent of their global turnover for breaches.

Ciaran Martin, a former chief executive of the UK’s National Cyber Security Centre, has criticised the government’s approach, saying it risks damaging Britain’s reputation for a law that may never be used.

He has called on ministers to publish more detail on how the regulation would work. He wrote in the Financial Times: “Surely then, parliamentarians should be shown the details of a workable draft regulation before voting? If not, this controversial power will be driven through, but likely never used.”

The messaging companies have also been supported by BCS, the Chartered Institute for IT, which criticised what it called the “magical backdoor” proposed in the bill.

Child safety campaigners argue that private messaging is the “front line of online child sexual abuse” and that it is possible to balance privacy and safety.

They point to a paper from last year by two technical directors at GCHQ, the UK’s eavesdropping agency, that argues for the scanning of phones for abuse material before encryption. A similar proposal from Apple was ditched because of a privacy backlash.

Richard Collard, associate head of child safety online policy at the NSPCC, said: “Experts have demonstrated that it’s possible to tackle child abuse material and grooming in end-to-end encrypted environments. Regulation should incentivise companies to find a balanced settlement and distance themselves from false arguments that claim children’s right to safety online can only be achieved at the expense of adult privacy.”

The House of Lords will begin line-by-line scrutiny of the bill in its committee stage today.

Downing Street defended the plan, with the prime minister’s official spokesman insisting “it will not introduce routine scanning of private communication”.

“It is being developed to ensure it has the requisite safeguards so it doesn’t weaken, by default, end-to-end encryption; it is a targeted power to be used only when necessary and when other measures cannot be used,” the spokesman said.

A Home Office spokesman said: “The Online Safety Bill in no way represents a ban on end-to-end encryption . . . where it is the only effective, proportionate and necessary action available, Ofcom will be able to direct platforms to use accredited technology, or . . . develop new technology, to accurately identify child sexual abuse content.”

The letter from the technology companies has also been signed by the chief executives of the British encryption company Element and the messaging services Viber, Threema and Wire.

Read more:
Online safety bill ‘opens door to surveillance’, tech giants warn

A lawsuit has been filed against Google to seek £3.4bn ($4.2bn) in compensation for publishers for lost revenue.

The claim, by ex-Guardian technology editor Charles Arthur, alleges Google unlawfully used a dominant position in online adverts in a way that reduced what publishers could make from them.

Google said it would fight the “speculative and opportunistic” action vigorously.

It is the second such lawsuit, after a similar case was launched in November.

That was brought by former Ofcom director Claudio Pollack, who is looking for up to £13.6bn in damages from the tech giant.

The cases concern advertising technology – adtech – that decides in a fraction of a second which online adverts consumers will see, how much they will cost, and how much publishers will earn.

Online display advertising is the main source of income for many websites.

The UK competition regulator, the Competition and Markets Authority (CMA), is also investigating Google’s dominance in advertising technology.

In the lawsuit, which was filed on Thursday, Mr Arthur claims that because of Google’s abuse of its position, the prices of adtech services were inflated, and ad sales revenues of publishers were unlawfully reduced.

“The CMA is currently investigating Google’s anti-competitive conduct in adtech, but they don’t have the power to make Google compensate those who have lost out. We can only right that wrong through the courts, which is why I am bringing this claim,” he wrote.

Both legal claims ask the court – the Competition Appeal Tribunal – to certify their claims as “opt-out”, meaning every relevant publisher would be automatically included in the case unless they choose otherwise.

These are collective claims, often referred to as a class action in the United States, which only became possible in the UK in 2015. Because they are brought on behalf of a whole group or class, the damages can be very large.

Unless Mr Arthur and Mr Pollack agree to collaborate, the tribunal will have to decide which one should lead the collective claim

Google has said that its advertising tools, “and those of our many adtech competitors, help millions of websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers”.

Although the CMA found that Google owned the largest provider in three key areas of adtech, the firm maintains it has many competitors. It also says its adtech fees are lower than, or match, industry averages.

But in a case launched in January, the US Justice department accused Google of being an “industry behemoth” that had “corrupted legitimate competition in the adtech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers”.

On Tuesday, Google asked a court to dismiss the case – arguing that the US government had overstated its hold on the market.

In 2021 the French competition regulator, Autorité de la concurrence, fined Google €220m for favouring its own services in the online advertising sector.

Read more:
Google faces new multi-billion advertising lawsuit

Matt Hancock’s leaked Whatsapps about the Covid-19 pandemic are not a subject for a data breach investigation “at this stage”, a top regulator has said.

Journalist Isabel Oakeshott, who worked with former health secretary Hancock on his book, Pandemic Diaries, handed over thousands of Whatsapp messages to the Telegraph.

The paper published claims including that Hancock rejected care home test advice and that then-education secretary Gavin Williamson said teachers wanted an “excuse” not to work.

But watchdog the Information Commissioner’s Office (ICO) – which monitors data protection regulation compliance, including GDPR – said the disclosures were not a “matter” for them.

A spokesperson said: “At this stage we do not see this as a matter for the ICO but there are questions around the conditions on which departing members of government retain and subsequently use official information which need to be considered by organisations such as the Cabinet Office.”

In a statement today, Hancock said: “I am hugely disappointed and sad at the massive betrayal and breach of trust by Isabel Oakeshott.”

He added: “There is absolutely no public interest case for this huge breach.”

Hancock said his working relationship with Oakeshott was based on “legal confidentiality” and “a process approved by the Cabinet Office” but he said she had “broken that trust”.

Oakeshott also claimed the MP had sent her a “menacing” message in advance of the leak – which he refuted, but said he had told her the leak was a “big mistake”.

The ICO spokesperson said there were exemptions around journalism and public interest issues.

They said coverage “raise[s] questions about the risks that the use of Whatsapp and other private channels bring, particularly around transparency.

“Last year, the ICO called for a review into the use of private messaging apps within government, and we would reiterate that call today.

“Public officials should be able to show their workings, through proper recording of decisions and the FoI Act, to ensure trust in those decisions is secured and lessons learnt for the future.”

Read more:
Matt Hancock leaked Whatsapps not ‘a matter’ for data breach inquiry, says regulator

US Supreme Court justices sounded wary on Tuesday of tinkering with a legal shield for social media firms in a case that could reshape the internet.

It pits the family of Nohemi Gonzalez, 23, who was shot by Islamic State gunmen in Paris in 2015, against YouTube owner Google.

They accuse the internet giant of aiding and abetting the terrorist group by recommending its videos to users.

Google argued it is not liable, citing a decades-old law.

The statute – Section 230 of the Communications Decency Act – protects internet companies from being held responsible over content posted by third parties on their platforms.

The 1996 law also allows companies to remove content deemed to be in violation of the platform’s rules.

On Tuesday, the Supreme Court justices heard nearly three hours of arguments from lawyers representing US officials, Google and Ms Gonzalez’s family.

The case marks the first time the Supreme Court has been asked to define the scope of Section 230 and determine whether platforms like YouTube, Facebook and Twitter are protected when their algorithms direct users to certain information.

During the hearing, justices noted that the current landscape of the internet had vastly changed since the law was first enacted 27 years ago.

Justices also expressed concern whether a ruling in favour of Ms Gonzalez’s family could open the door to a deluge of litigation against tech companies.

“You are creating a world of lawsuits,” Justice Elena Kagan, a liberal, said. “Really anytime you have content, you also have these presentational and prioritisation choices that can be subject to suit.”

Two other justices, Samuel Alito, a conservative, and Ketanji Brown Jackson, a liberal, acknowledged they were confused by arguments made by a counsel for the Gonzalez family.

Justice Brett Kavanaugh, a conservative, expressed concern that any ruling to limit the legal shield for internet firms “would really crash the digital economy”.

Ms Gonzalez’s family first sued Google in 2016, arguing the tech giant had violated federal anti-terrorism laws by recommending videos posted by the Islamic State to its users.

Two lower courts have found in favour of Google, ruling the tech giant was protected under Section 230.

The Supreme Court is expected to release a decision on the case by end of June.

On Wednesday, the justices will hear a similar case on the question of whether Twitter aided terrorism by allowing the Islamic State to use its platform.

Read more:
US Supreme Court wary of removing tech firms’ legal shield

When a company is facing the prospect of insolvency, whilst the priority may be trying to save the company itself, it is also important to conduct the insolvency in accordance with legislation designed to protect the workforce.

Here Justin Tarka, Partner at Ogletree Deakins explains that even in insolvency, the company is liable for employee debts and may be pursued by employees for a variety of sums including unpaid wages, notice pay, damages for breach of contract at termination or judgment debts for compensation from previous claims. The inevitable question arises – if the company is insolvent, why would the employee make a claim? Whilst the majority of the payments listed above are unsecured debts, employee’s “remuneration” is a preferential debt, ranked third in priority of payments during insolvency. This means the employees are creditors of the insolvent company, and employees who write to the insolvency practitioner with their claim may have these debts satisfied in full.

Transfer of Undertakings (Protection of Employment) Regulations and Redundancies

Employee debts should not be the only concern in an insolvency process, companies may be liable to pay awards for failure to follow the statutory processes for redundancies or transfer of employees.

Selling and/or transferring all or part of their business to another owner is a common scenario in the context of an insolvency. If that is being explored as an option the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) will need to be considered. The regulations provide numerous protections to safeguard transferring employees and ensure their employer keeps them informed by consulting them during a company take-over. This is designed to help limit the potential detriments employees may be subjected to if there is a change of owner, such as a drastic variation in their terms and conditions of employment.

The regulations do however recognise that an insolvency situation differs from a typical sale, and provide some flexibility, including the ability to make “permitted variations” to employees’ contracts of employment. However, it’s important to bear in mind that this flexibility only applies where insolvency proceedings have been commenced and an insolvency practitioner has been formally appointed.

Despite this, the company crucially still cannot avoid the responsibility to inform and consult with employees on the transfer. Whilst the regulations do provide a ‘special circumstances’ defence to such failures, given the purpose of the legislation is to protect employees, any application of this is likely to be narrowly construed by any court.

Liabilities can also include awards for a Company’s failure to follow relevant redundancy procedures and the management of any redundancies which may be necessary is where awareness and compliance with applicable legislation becomes particularly important.

Redundancy is a potentially fair reason for dismissal where the reason is ‘wholly or mainly attributable’ to business or workplace closure, or there is a reduced requirement for employees to carry out a particular type of work. If the business is not completely closing and for example some employees may be kept on in the business objective selection criteria should be applied to the group of relevant employees to fairly determine which roles are most appropriate for redundancy. Employers should be careful to document the decision-making process to illustrate how the business came to their conclusions, which will help if the decision is later challenged by terminated employees.

Where redundancies do become necessary, employees with qualifying service of two years are entitled to a statutory redundancy payment. The UK government provides financial assistance via the Redundancy Payments Service (RPS). An insolvent company can apply to the RPS, who then make payments to employees direct. The company is then indebted to the government and failure to repay may lead to enforcement action.

Following the 2008 EU Insolvency Directive, the UK was required to set up a ‘guarantee institution’ to protect the financial interests of employees. The National Insurance Fund (NIF) guarantees certain debts owed by insolvent employers to their staff. If an employer is unable or unwilling to make payments for which they are liable, the Secretary of State may guarantee the payment from the NIF, such as pay arrears and pension contributions to eligible employees. The NIF also covers an ‘employer payment’, including statutory redundancy pay.

Conflicting Priorities

Employers must have ‘meaningful’ consultation with the employees they are proposing to make redundant. ‘Meaningful’ consultation is not a tick-box exercise, but it need not be complex. Consultation should involve discussions about ways of avoiding dismissals, reducing the numbers of employees to be dismissed, and mitigating the consequences of the dismissals, for example by offering compensation or outplacement support.

Collective consultation obligations apply where the employer is proposing to make 20 or more employees redundant in the same workplace over 90 days or less. If collective consultation is required, it will still be necessary to consult directly with the affected individuals prior to any final decisions as to individual redundancies or termination of employment being made but there must also be consultation with any existing employee representatives of employees who may be dismissed or may be affected by measures taken in connection with those dismissals (which includes employees who are not dismissed but whose job is changed or affected). Alternatively, if there are no existing representatives such as trade union reps, the obligation is to facilitate the election of representatives.

Under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA) if collective consultation is necessary, there is also an obligation to notify the RPS about the proposals and the number of employees to be dismissed. If 100 or more redundancies are proposed, notification and collective consultation must begin at least 45 days before the first dismissal. If less than 100 redundancies are proposed, the period is 30 days.

The duty to inform and consult employees applies even in a compulsory liquidation scenario and the time and resources spent on an effective consultation may not seem as appropriate as trying to find a solution to prevent the company’s closure. For example, it may be a difficult decision to balance the need to allow time to elect representatives where there is a collective consultation obligation or to consult on proposed changes which involve highly sensitive information where that may jeopardise rescue efforts.

This obligation to simultaneously try to save a company and comply with responsibilities to employees is a recognised struggle. The Government acknowledged this issue by opening a consultation, a short response to which was published in 2018. It highlighted the fact that insolvency practitioners considered the TUPE and TULCRA requirements a hindrance to their role in rescuing the company.

Ultimately, the Government decided they are content that the penalties for non-compliance in existing legislation are effective, but decided that new guidance for insolvency practitioners would be helpful.

Conclusion

Due to the various methods of insolvency and the varying implications these have on the company’s obligations as an employer, advice should be sought to ensure the best course of action is followed. This should aid in meeting obligations to the company, but also to employees.

Insolvency practitioners have agency power and the company will not be absolved from liability in a scenario where little or no statutory redundancy process is followed. Employers who find themselves in this situation should take advice to ensure they comply with their duties of consultation with any redundancy measures they take.

Read more:
How can employers manage redundancies when going insolvent?

An artist who made and sold digital images of Birkin handbags covered in fur violated trademark rights, a Manhattan court has concluded.

The fashion giant Hermes, which owns the luxury brand, sued Mason Rothschild after he created non-fungible tokens, or NFTs, based on the famous bags.

Hermes said consumers would believe the products were officially associated with the brand.

The landmark case sets a precedent for other trials around NFTs.

The jury awarded Hermes $133,000 (£110,000) in damages, rejecting Mr Rothschild’s argument that his products, which he began selling in 2021, were works of art commenting on the market for luxury goods and should be protected by laws governing free speech.

A lawyer representing Mr Rothschild said it was a “terrible day for artists and the First Amendment”.

There has been a flurry of interest in NFTs over the last few years. The digital tokens are unique products that are verified using blockchain technology. While most sell for around a hundred dollars, they can be worth millions.

In the physical world a Birkin leather handbag also commands a high price – tens of thousands of dollars depending on the version.

Mr Rothschild produced a series of images of the famous bag calling them “MetaBirkins”. One was covered in shaggy green fur. There was a version based on Van Gogh’s “Starry Night” painting, and an animation of a foetus growing inside a transparent Birkin handbag – a play on the brand’s smaller model of its bag known as the “baby Birkin”.

The artist claimed his works were in the same vein as Andy Warhol’s reproductions of Campbell soup cans.

But the jury decided they should be seen as consumer products and were therefore covered by trademark law.

Hermes said Mr Rothschild was a “digital speculator” who created his images of the bag as a “get rich quick” scheme. It said over $1m (£828,000) worth of MetaBirkins had been sold since December 2021.

The fashion house said it had plans to issue NFTs itself, which were constrained by Mr Rothschild’s actions.

The court’s decision will be closely watched by other brands seeking to clarify trademark rules around NFTs.

Read more:
Court rules NFT images of furry Birkin bags violated trademark legislation

With the increased threat of industrial strike action looming across the UK, we consider whether a force majeure clause can strike the right chord during such action.

As we emerged from the pandemic, many businesses had hoped to move forward and leave the struggles and difficulties of the pandemic behind.

However, industrial strike action has exacerbated staff shortages and has the potential to cause major disruption to supply chains in sectors such as health, logistics, manufacturing, and transport. Therefore, as we approach what looks set to be a winter of strike action, many businesses may be wondering how they will get through the next few months with concerns over whether:

• They will have the staff to operate their business.
• They will suffer operational delays and supply chain delays or unavailability of materials, and
• They can comply with all their contractual obligations; and
• Their business-critical trading partners can continue to do the same.
• We consider whether strike action could give rise to a force majeure event and what steps businesses should take when relying on force majeure provisions in their contracts.

Step 1: Identify who is striking and what the impact is on your business

This may seem obvious but considering who is striking is vitally important. Is it:

• Your workforce?
• Your supplier’s workforce?
• Another third party’s workforce, which is then impacting how your business operates?

Who is instigating the circumstances giving rise to the potential force majeure event must be identified as the definition of force majeure event may exclude industrial action of your workforce or industrial action of any kind whatsoever. If so, Carla Murray and Olivia Whittaker, Partner and Solicitor in the Commercial Team at legal firm Myerson say that you may not be able to rely on the provisions of the force majeure clause and will therefore need to take alternative steps to ensure you comply with your contractual obligations to avoid being in breach of contract.

Step 2: Identify what is a force majeure event

Identify whether your contracts have a detailed definition of force majeure; force majeure events typically can be natural events (fire, flood, earthquakes etc.), human events (wars, invasions, strikes etc.) and other identified industry-specific risks or whether they simply refer to “circumstances outside your control” and ascertain whether strike action potentially comes within the definition of force majeure event.

Some force majeure clauses may name ‘industrial action’ or ‘strikes’ as a specific event allowing a party to suspend the performance of its affected obligations, whereas others may lack this wording and force parties to rely on references to events which indirectly arise due to industrial action, such as ‘staff shortages’ or ‘default of suppliers’.

In the latter case, it is important to consider whether staff shortages or supplier defaults are the actual cause of a party being unable to perform its obligations; that is, staff shortages or supplier defaults should not be a mere “inconvenience” or “added logistical barrier”, otherwise that party may not rely on relief under force majeure.

Important Note: There is no concept of force majeure under English law, so if your contract does not have explicit written terms dealing with this subject, the concept of force majeure cannot be implied in your contractual relationship.

Step 3: Analyse what the clause says and its effect

Although typically, force majeure clauses will permit a party to suspend the performance of its obligations under a contract. You need to consider whether the contract contains detailed provisions on what will happen should a force majeure event occur.

Although force majeure clauses are considered by many to be a standard “boilerplate” clause, the wording of force majeure clauses can vary in significant ways from contract to contract, so an in-depth analysis of what rights your business has or what obligations your business may be under in each affected contract is an important step.

To rely on force majeure, a business must be able to prove that:

• A force majeure event has arisen.
• This event has prevented or delayed the business’ performance of the contract.
• Their part or non-performance was due to circumstances beyond their control, and
• there were no reasonable steps that the business could have taken to avoid or mitigate the event or its consequences.

Some force majeure clauses may only allow a party to rely on them where the force majeure event makes the performance of certain obligations (which may be stated within the clause) impossible and, therefore, may be very restrictive in their application. Others may allow for relief where events “hinder” the performance of the obligations.

A party should also consider whether there are reasonable steps they could take to prevent the event from occurring in the first place. In the case of industrial action, this could be a hurdle in scenarios where the affected party has a direct relationship with the relevant trade union and, therefore, could have taken reasonable steps to negotiate an end to the strike (or even avoid it completely).

Step 4: Continue to assess evolving circumstances.

Companies that are successful in relying on force majeure clauses constantly monitor what is and what is not possible for their businesses to do on an ongoing basis. Due to the uncertain nature of a strike, businesses need to be able to adapt to changing circumstances. More force majeure clauses may need to be activated with different customers or suppliers or activated for different obligations. It is, therefore, critical to identify specifically what is preventing your business from operating as normal and at what point you expect normal services to recommence.

Companies should also assess whether they have introduced measures for operational, purely financial, or a mixture of several reasons and analyse these against the wording of the force majeure clause.

Step 5: Check for any procedural requirements.

Prudent negotiators of contracts would not only specify limited events which count as reasonable force majeure events but would also require that the party seeking to rely on the same meets certain minimum requirements, such as:

• Promptly notify the other party of the existence and effect of the force majeure event.
• demonstrating causality between the existence of the force majeure event and the company’s inability or hindrance in performing its obligations; and
• Evidence that the business cannot perform its obligations despite using its reasonable endeavours to mitigate the effects of the force majeure event.

A requirement to mitigate the effects of the force majeure event implicitly requires that a business has adequately prepared itself for adverse issues which it may face, such as via a business continuity or disaster recovery policy.

Ensure that you comply with any notice requirements specified in the clause or elsewhere in the contract, even if it is difficult to do so amid the threat of a contract or commercial relationship breaking down.

Important note: be prepared to defect the content and execution of your company’s disaster recovery plans and use of second and third-tier suppliers.

Conclusion

To conclude, the reliance on force majeure clauses is increasingly relevant in the wake of the pandemic, the ongoing war between Russia and Ukraine and now a potential winter of strike action; however, not only will businesses need to have an awareness and understanding of the force majeure clauses in their current contracts, but also an appreciation as to how such clauses are interpreted against an evolving landscape of commercial disruption and potential force majeure events.

Read more:
Will force majeure clauses strike the right chord during industrial action?

With its colourful numbers and hands helpfully labelled minute and hour, a children’s learning clock from Oyster & Pop, a family firm in Devon, is sold online for about £20. A Rolex Oyster watch, on the other hand, calls itself a “superlative chronometer” and costs nearer £5,000.

Rolex is demanding that the smaller company change its name, however, arguing that people might think the Teignmouth children’s clocks have something to do with the Swiss watchmaker.

Oyster & Pop, which also sells wall charts, fraction sets and highlighters, was set up in 2021 by Emma Ross-McNairn and her sister Sarah Davies. The company is named after Oyster Bend in Torbay, where they grew up.

Lawyers for Rolex, which is based in Geneva, wrote to Oyster & Pop in early January to demand they rebrand. Rolex claims it is a similar name to its Oyster Perpetual line of watches.

The company says that the “average, reasonably well-informed consumer” would probably call the Rolex line of watches to mind when looking at the Oyster & Pop logo.

The letter added: “Consumers will inevitably be misled into thinking that your products emanate from Rolex.”

As a result the lawyers have demanded the firm change its logo, website domain and name to avoid further action.

Ross-McNairn, 46, said the situation was “nonsense” and that the lawyer’s letters had been “bullish”.

She told the BBC: “If someone says oyster to me, the first thing I think of is the Oyster Card on the Tube, not Rolex watches. I don’t think anyone could confuse our clocks as coming from Rolex.”

The Rolex Oyster was introduced in 1926 as the first waterproof watch. The Oyster Perpetual appeared in 1933 as the first waterproof automatic watch. James Bond wore one in Ian Fleming’s original books — it gets a name check in On Her Majesty’s Secret Service — although Bond wears a Rolex Submariner in the films.

Oyster & Pop says on its website: “With the help of some teacher friends, we designed a clock to inspire kids to learn how to read analogue time whilst also making great looking wall decor.”

It is the second time Rolex has pursued the company. It previously beat the sisters by default in a trademark dispute in the US after Oyster & Pop was unable to pay for a legal battle over the issue.

Rolex USA lawyers had told the sisters that changing their category filing from International Class (IC) 14 for clocks to IC28 Toys and Games would resolve the issue.

However, the sisters say now they have made the change, lawyers have since decided that this would no longer be enough.

Ross-McNairn, who founded the business during lockdown in 2020, says that the rebranding would “crush” their small business.

She has started a petition on change.org which says: “We believe that there is no risk of anyone confusing us with Rolex.

“We don’t think that Rolex should be allowed to stop us from using a name that is not only substantially different from theirs but has personal connections to us as the founders of a small business. Rebranding would destroy Oyster & Pop.”

Read more:
Rolex demand children’s clock startup change name in trademark dispute

While world leaders convene in Egypt for Cop 27 to discuss progress on The Paris Agreement, the legally binding international treaty on climate change adopted in 2016, it is easy to think the green agenda is something remote from day-to-day business for UK SME owners.

However, an interesting statistic from the Grantham Institute’s 2021 ‘Global Trends in Climate Change Litigation Policy Report’, showed the number of climate change-related court cases has more than doubled since the Paris Agreement. In fact, as at 31 May 2022, there were 2,002 cases of climate change litigation globally.

Katie Allard, associate in the Dispute Resolution team at Kingsley Napley LLP explains that UK companies and business owners are not immune. Earlier this year, ClientEarth started legal action against Shell PLC’s 13 executive and non-executive directors, seeking to hold them personally liable for failing to properly prepare a climate strategy consistent with the Paris Agreement.

In the first case of its kind, ClientEarth claims that the board’s failure to adopt and implement a climate strategy that truly aligns with the Paris Agreement is a breach of the directors’ duties under sections 172 (the duty to promote the success of the company) and 174 (the duty to exercise reasonable care and skill) of the UK Companies Act 2006.

It is anticipated that this landmark case will open up the floodgates to further ESG (Environmental Social and Governance) related claims; enabling action to be taken against not only businesses, but also the individuals who control the companies and make the decisions if a case can be made that there has been a failure to meet climate related responsibilities.

There are several factors behind the growing trend in ESG litigation which might be brought by private individuals, as well as climate activist groups.

A developing ESG Regulatory Framework globally. New obligations on companies in the ESG arena are emerging all the time and are a reason to hold companies to account. A new directive passed by the European Commission in February 2022 for example imposes a corporate due diligence duty on in-scope large companies operating in Europe to ensure that they contribute to sustainable development and the sustainable transition of economies by identifying, bringing to an end, preventing, mitigating and accounting for human rights and environmental impacts in their value chains.

Anticipated disclosure requirements in the US. The U.S. Securities Exchange Commission (SEC) is finalising rules to require climate change disclosure in the annual reports, prospectuses and registration statements of all public companies registered with the SEC, including any company (domestic or foreign) whose stock is listed on any U.S. stock exchange. Where the US leads other financial regulators may follow.

Growing climate-related group actions. Climate Group litigation such as the dirty diesel cases against various car manufacturers are on the rise in the UK, as are the size of such claims. The fact Volkswagen agreed to pay £193m to settle the 91,000 legal claims brought against it in England and Wales following the “dieselgate” emissions scandal is likely to make similar group actions attractive to litigation funders and litigants.

Increased funding options. The growth of the litigation funding market is helping to support many ESG related claims. There are now estimated to be £13bn of litigation funds operating in the UK market place.

Crackdown by Watchdogs. UK authorities are beginning to crackdown on how organisations present their ESG credentials. In October 2022, for example the Advertising Standards Authority (ASA) found that HSBC had misled customers by making unqualified claims and omitting material information about its environmental credentials in two high street adverts that appeared the run up to COP26. Earlier in the summer the Competition and Markets Authority (CMA) launched its first so called greenwashing investigations under the Green Claims Code into the eco-friendly and sustainability claims made by ASOS, Boohoo and George at Asda about their fashion products, including clothing, footwear, and accessories. We can expect to see more regulatory scrutiny of green marketing in other sectors future.

Business owners should therefore be alive to the risk of litigation from:

• Investors who rely on false or misleading statements about ESG practices when deciding whether to invest in a business or a fund.
• Shareholders of private limited companies relying on ESG information that turned out to be false or misleading.
• Shareholders in listed companies relying on false or misleading information published in listing particulars, the prospectus, annual reports and accounts, directors’ reports, strategic reports and corporate governance statements.
• Shareholders of a subsidiary relying on a parent company to exercise a degree of supervision and control of its subsidiaries, but when it does not in fact do so. The failure to exercise an appropriate degree of supervision and control may constitute the abdication of a responsibility that it has publicly undertaken through its ESG disclosures, and thus leave it liable to claims.

Bringing claims in such scenarios will not be straightforward, and claimants will likely face some tricky hurdles, for example when it comes to proving reliance on the statement(s) in question and quantifying losses.

However, it is important that directors are clear as to their duties and seek independent legal advice immediately if they are concerned by the actions or decisions of their fellow directors.

It would also be prudent to ensure regular internal risk assessments are carried out including due diligence on supply chains, with external auditing and validation recommended if this is practical. And business planning for a low carbon/carbon neutral economy should be realistic, achievable and transparent to lessen the risk of misrepresentation.

As the recent so-called backlash against ESG demonstrates, businesses are being held to account if they over-promise or under deliver on green and climate related strategies.

It is an unenviable path for business owners to walk, but the risk of green litigation can no longer be ignored. It now deserves a place on the business agenda.

Read more:
Green related lawsuits: the sign of things to come

The Court of Appeal has clarified an important aspect of trade mark law in the latest round of Lidl v Tesco, in a judgement handed down by the court this morning.

Tesco has been permitted to continue to argue at trial that a wordless version of Lidl’s logo was periodically filed and refiled by Lidl in bad faith; overturning the High Court decision, which had previously disallowed Tesco’s allegations of bad faith.

Richard Kempner, partner at Haseltine Lake Kempner, who represented Tesco in this case says: ‘This is an important decision for trade mark owners, issued by the Court of Appeal this morning. Tesco had two principal arguments underpinning its allegations of Lidl’s bad faith filing. First, the fact that Lidl had never used, in the UK, the wordless mark in the form in which it was registered, 27 years since they had first applied for it.

‘Secondly, Tesco argued that Lidl, in order to avoid the “non-use” provisions (a rule that says that marks that have not been used for five years can be revoked), had kept reapplying for the mark periodically since then (an allegation of “evergreening”). Tesco alleged that the mark was on the Register purely to extend Lidl’s monopoly right beyond the mark it actually used, so as to use the extended right against third parties as a weapon in legal proceedings.

‘Lidl argued that there were a number of entirely legitimate reasons why it might have applied for the wordless marks, and that Tesco had not provided a sufficient basis for its claim of bad faith to justify requiring Lidl to explain its actual reason(s) for applying for the wordless mark registrations, whether by providing disclosure and evidence in relation to its filing strategy, or otherwise. The Court of Appeal however decided that Tesco’s claim had ‘a real prospect of success’.

The implications of this decision for trade mark owners are serious. To the extent that they and their advisors may have thought that it was legitimate to file and re-file marks that they are not actually using to extend or protect their rights, and/or avoid the non-use provisions. It is now clear, if ever, there was any doubt, that such a practice is not necessarily legitimate, and may well constitute bad faith trade mark filing.

The decision also recognises that a party alleging bad faith is unlikely to have, at the outset, much or any information as to why the trade mark owner filed its mark, and therefore it is permissible, pending disclosure and evidence, to allege bad faith on the basis of inferences from facts which may later turn out to have a legitimate explanation.

The trial of the action between Lidl and Tesco, where the matter will be finally resolved, is due to take place in February 2023’.

Background about the case

The claim concerns Tesco’s Clubcard Prices loyalty discount scheme, which launched in September 2020, and offers point-of-sale discounts on selected items to Clubcard members. Lidl claim that the sign used by Tesco for the scheme – a yellow circle on a blue square with the words “Clubcard Prices” – constitutes infringement of Lidl’s intellectual property rights, based on it allegedly being similar to the background to Lidl’s logo (which uses a blue square and yellow circle with a thin red border around it). Tesco deny the allegation and have counterclaimed for invalidity and revocation of Lidl’s registrations of its wordless background, which has never been used in the UK in the form in which it was registered, on a number of grounds including bad faith trade mark filing.

Haseltine Lake Kempner acted for Tesco, and instructed Simon Malynicz KC and Daniel Selmi. Bird & Bird acted for Lidl.

Read more:
UK Court of Appeal clarifies trade mark law

It has taken a while but we now have a much clearer picture of what enforcement action and prosecutions for Bounce Back Loan fraud looks like.

The latest figures quoted by the National Audit Office suggest that between £3.2 and £6.3 billion of the total cost of the Government’s £96.9 billion emergency Covid-19 support, was claimed in error or fraud.

In November 2020, the National Audit Office was critical that no credit checks were used in the Bounce Back Loan Scheme – as a consequence unviable businesses were given access to the loans. It was predicted at the time that as much as £26 billion could be lost to fraud.

The Bounce Back Loan Scheme was brought in too quickly for a fraud prevention strategy to be implemented, giving a window where fraudulent claims would go unmonitored.

Banks were expected to use their own enforcement powers to monitor applications and close down those businesses they suspected of fraud. It was only in September 2020 that banks started to get to grips with the backlog. We know that 150,000 ineligible claims were blocked.

Lord Agnew, (Pictured above) The government’s former counter-fraud minister, has said that many banks did not run thorough checks on borrowers before handing out loans through the scheme, claiming that Starling Bank was “one of the worst”. Starling has robustly denied the allegation.

Jeremy Asher, Consultant Regulatory Lawyer, Setfords explains how these fraudulent cases being chased, and what is happening to the perpetrators?

A suite of different enforcement action is now taking place:

Firstly, the banks identify suspicious applications and use traditional anti-fraud measures such as Cifas markers after issuing default notices, closing down and freezing accounts – these markers block access to credit and banking facilities for 6 years. Challenging such decisions is a difficult, technical and specialist area of law. Where default notices are issued repayment plans are negotiated with the banks.

The Insolvency Service takes the cases where it is apparent that businesses have been wound up. Companies House is now refusing to allow applications by companies wishing to be struck off the register which had previously applied successfully for Bounce Back Loans.

The National Investigation Service is now actively investigating cases notified to it by BEIS where fraudulent applications have been flagged, and is working with the CPS to bring criminal prosecutions.

In the most serious cases, the Proceeds of Crime Act will be used to make Confiscation Orders for the recovery of the funds following successful criminal prosecutions.

Read more:
Fraudulent Bounce Back loan application prosecutions – what the landscape looks like

Millions of Amazon customers could receive a share of £900 million in compensation after the launch of a legal claim against the internet retailer for “abusing its dominant position”.

A consumer rights campaigner has teamed up with a top legal firm to allege that Amazon breached competition law and caused millions of UK shoppers to pay more than necessary by obscuring better online deals.

Amazon is an online retailer and a marketplace where tens of thousands of smaller retailers compete to sell goods. The legal action, to be filed in the Competition Appeal Tribunal in London, will claim that the American tech giant conceals offers by these third-party retailers in favour of products it sells itself.

The claim alleges that Amazon channels shoppers towards its “featured offer” box and the retailer uses a “secretive and self-favouring algorithm” to ensure this box nearly always includes goods sold directly by itself or by third-party retailers who pay “hefty” storage and delivery fees to the company.

Julie Hunter, a consumer advocate who is bringing the claim, said Amazon’s “Buy Box” prevents consumers from navigating the website for cheaper offers. She alleges this “manipulation” breaches Amazon’s obligation as the dominant marketplace not to distort competition. She said Amazon “uses tricks of design to manipulate consumer choice and direct customers towards the featured offer in its Buy Box”.

Hunter, who is a member of the Financial Services Consumer Panel, an independent statutory body, added: “Online shoppers have a right to be treated fairly and to be able to make informed decisions. This lack of transparency and manipulation of choice is an abuse of consumers’ trust, as well as a raid on their wallets.

“Amazon shouldn’t be allowed to set the rules in its favour and treat consumers unfairly. That is why I am bringing this action.”

The legal claim takes advantage of new rules that allow an “opt-out collective action” against companies where an individual can make a claim on behalf of millions of others without their explicit consent.

The claim is financed by a litigation fund that raises cash from investors to take on companies in the hope of taking a share of any proceeds. The claim is seeking damages of about £900 million.

If the claim does win, customers who have shopped at Amazon since 2016 will be able to apply for a share after the fund has taken its cut. Assuming the fund takes a quarter and ten million people could prove they have shopped at Amazon in the past six years, each could be eligible for £67 compensation. Amazon was approached for comment.

Lesley Hannah, a partner at Hausfeld & Co LLP, which is leading the litigation, said: “Most consumers use the ‘Buy Box’ when purchasing products on Amazon — estimates range from 82 per cent to 90 per cent. This means that millions of consumers have paid too much and been denied choice. This action seeks fair redress for them.”

Amazon have replied to the action with an official statement: “This claim is without merit and we’re confident that will become clear through the legal process. Amazon has always focused on supporting the 85,000 businesses that sell their products on our UK store, and more than half of all physical product sales on our UK store are from independent selling partners. We always work to feature offers that provide customers with low prices and fast delivery.”

Read more:
Amazon facing £900m payout to shoppers over online ‘manipulation’

A catalogue retailer has been issued with a huge fine for using customers’ shopping habits to try to predict their health problems and then bombarding them with aggressive calls to sell related medical products.

The Information Commissioner’s Office levied a £1.35 million penalty against Easylife for the abuse of customers’ data and further £130,000 for making more than 1.3 million “predatory” direct marketing calls.

The company sells home and garden products, clothes and gadgets, as well as health and beauty products.

The data watchdog’s investigation found that the retailer would make assumptions about the medical condition of a customer when they bought certain products. If a customer bought a jar opener or a dinner tray, for example, Easylife would assume that they had arthritis and call the individual to market glucosamine joint patches.

Easylife was found to be selling 80 items that would trigger medical cross marketing.

The investigation found that “significant” and “invisible” profiling of customers took place, with those targeted unaware the company was collecting and using their personal data for the purpose of selling them related items.

In a separate investigation, the data watchdog found that Easylife made 1,345,732 unwanted marketing calls to people registered with the Telephone Preference Service in the year to August 2020. People register with the service when they do not want to receive unsolicited calls.

The Information Commissioner’s Office said it had received 16 complaints about Easylife, with people saying they felt angry, anxious, threatened and distressed in response to the calls.

In a statement, John Edwards, the Information Commissioner said: “Easylife was making assumptions about people’s medical condition based on their purchase history without their knowledge, and then pedalled them a health product – that is not allowed.

“The invisible use of people’s data meant that people could not understand how their data was being used and, ultimately, were not able to exercise their privacy and data protection rights. The lack of transparency, combined with the intrusive nature of the profiling, has resulted in a serious breach of people’s information rights.

“Easylife was not only found guilty of breaching data protection law, but our investigation also discovered that they made thousands of predatory marketing calls to people who clearly did not want to receive them.

“It is clear from the complaints we received that people felt threatened and distressed by the company’s aggressive tactics. This is unacceptable.

“Companies making similar nuisance calls and causing harm to people can expect a strong response from my office.”

Easylife’s accounts show that the company increased pre-tax profits by more than 2,000 per cent to £2.13 million in 2020.

The data watchdog’s biggest ever fine was in 2020 when it charged British Airways £20 million for failing to protect the personal data of more than 400,000 customers.

Members of the public who believe that their personal data has been misused or that they have been the victim of nuisance texts, calls or emails, can report them to the ICO on 0303 123 1113.

Read more:
Catalogue firm Easylife fined for using shoppers’ habits to predict health issues

With businesses facing significant uncertainty following the latest tax changes and the adverse market response, this month I consider how businesses can and should respond to this situation.

Before I look at my tips for navigating these times, it’s worth reminding ourselves of the basic principle that for any tax system to operate effectively it must be:

• In other words, tax should be paid in proportion to the amount of income earned.
• Taxpayers must have certainty as to the amount of tax to be paid and when it must be paid.
• Convenient (i.e. easy) to pay tax; and
• Not too costly for a government to administer.

(The Wealth of Nations, Adam Smith)

Generally these principles, in one form or another, have always underpinned the UK tax system.  The mini budget on 23 September 2022 has been widely judged to have failed to adhere to these principles.  The announcements overlooked the fact that citizens need to plan for the taxes they are required to pay. It ignored the fact that investors make their investing decisions based on certainty and a stable investing environment, where a degree of predictability is a good thing. And it certainly discounted completely the reaction of the markets to unfunded announcements.

However, overall, business came out of the mini-budget well.  Planned increases to national insurance and corporation tax were scrapped; the health and social levy was also scrapped; IR35 was reversed to the pre-2017 position; incentive zones were announced; investment incentives and option plans were expanded.  A raft of pro-business measures designed, say the government, to stimulate growth.  A growth agenda is a welcome strategy and, certainly, our business bodies have been calling for this for some time.  But some of the changes announced must bring frustration to business too, if only for the sheer amount of time and effort spent complying with the soon-to-be-repealed measures.  For example, IR35 for the private sector was delayed by a year to give medium and large businesses more time to prepare for the changes and significant work was undertaken to ensure compliance.

The cost of these new pro-business measures is yet to be disclosed, as is the detail of how they will be funded. This brings substantial uncertainty to the business environment as the cost of borrowing goes up and interest rates start to tick upwards.

There is no doubt that the current business landscape feels unsettled. So, how can business leaders navigate this time? The below are not necessarily answers but are some considerations to bear in mind as you navigate the period ahead:

• Be prudent. If you can, consider whether you should keep more cash on hand than you would normally.
• If you trade overseas, is now the time to be thinking about currency hedging if you don’t already do it?
• Talk to your trade and industry bodies to get their advice and insight. Many will be lobbying Government to ensure a stable, sustainable trading environment, and arguing that the competitiveness of the British business environment depends on this message getting across.
• Do pay attention to what the opposition political parties are saying they would do if the win the next general election. Usually, new governments make tax changes and hopefully the opposition will be learning the lessons from this week and headlining any tax changes well in advance of making them.
• Look out for the OBR forecasts. We know that it will be made available to the Government on the 7^th October, but only publicised on 23 November 2022.

It looks like we are in for a bumpy ride over coming months, and while we wait for a clearer picture to emerge, the best advice I can share with business leaders is to maintain some semblance of equilibrium. And hang on in there!

Read more:
The certainty of uncertainty: Business finds itself on the wobbly board following mini-budget

Ed Sheeran has found himself at the centre of a second copyright lawsuit for his hit ‘Thinking Out Loud’ just six months after he was cleared for copying ‘Shape of You’ back in April.

The claim by investment banker David Pullman was made back in 2018, who is seeking £90million in damages after the artist supposedly exploited and copied Marvin Gaye’s ‘Let’s Get it On’ without authorisation or credit for the song.

James Juggapah, a legal expert at BPP University Law School is not surprised by this latest lawsuit, as many musicians continue to find themselves at the centre of copyright infringement cases due to how high profile they can become within the media.

“If you follow the music world then many people are probably aware of the countless artists that have been slapped with million-dollar lawsuits over copyright infringement in the last few years or so.

“Dua Lipa, Mariah Carey and Katy Perry are among some of the chart-topping artists that have been involved in these high-profile cases.

“The way we consume and produce music has changed substantially over the last few years, with the ability to stream hours of songs and thousands of artists at our fingertips. This means that music that may often rely on catchy chord progressions is more likely to be copied accidentally, and a perfect example of this comes in the form of mainstream pop.

“However, what caused the major shift in the number of copyright infringement lawsuits can be traced back to the famous Robin Thicke “Blurred Lines” case in 2015.

“The lawsuit saw Thicke forced to pay $4.7 million in damages after Marvin Gaye’s team sued the singer for copying his hit song “Got to Give it Up”.

“After winning the case, claimants’ attitude towards copyright infringement fundamentally changed, with many more confident to take legal action against artists that had sampled or copied their work.

“But, while this shift in attitude may be good for some artists, it has left others scared of tapping into their creative impulses for fear of being called out. This is not what copyright law is made to do, it is in place to protect artists’ rights to their own work but shouldn’t make other artists fearful in the process.

“The latest music lawsuit involving Ed Sheeran not only highlights how much these cases are happening, but it also reaffirms that copyright law needs to be refreshed to fit the new ways music is being produced and consumed.”

What are my rights as a copyright owner?

Copyright laws under the Copyright Designs and Patents Act 1988, are put in place so that creators have a number of exclusive rights to their own work that stop others from copying and distributing it without their permission.

These rights include:

Reproducing or making an adaptation of the work

As a copyright owner, the creator has the ability to re-create or make adaptations of their original work into new formats. Transformations or making adaptations to the original work can include everything from editing, translating or modifying the content.

Performing, showing or playing the work to the public

Under copyright law, creators also have the right to control how work is performed, played or shown to the public. Performance of the creator’s works is considered to include performing in a place open to the public or playing in a location where there is a substantial amount of people that are outside of the creator’s friends and family.

Control over how the work is distributed to others or the public

Another right creators have over their own work under the copyright law, is having the ability to control how their work is distributed to others or the general public. This means that the copyright holder is able to prevent the distribution of unauthorised copies of their work without their permission.

Ability to control the way work is displayed to the public

Similarly to the right of being able to control how work is performed to the public, copyright holders also have the right to control the way work is displayed to the public also. What this means is that the creator can control work that can be displayed like photographs, and images of designs and can also include written or literary work displayed on a webpage.

The right to follow

The right to follow is usually only granted to artists or authors. What it means is that under copyright law, creators are able to take a percentage of the subsequent sales of their work.

Read more:
Ed Sheeran facing a second copyright lawsuit

Lawyers and litigation funders have hit back at EU plans to regulate the third-party litigation financing industry in claiming new rules could limit access to justice.

The clashes come after the EU parliament on Tuesday voted overwhelmingly in favour of adopting a report by German MEP Axel Voss calling for new regulation of Europe’s litigation funding sector.

Third-party litigation funders bankroll lawsuits with a view to taking a cut of any winnings.

The Voss report calls for litigation funders’ fees and payments to be capped at a maximum of 40 per cent of any winnings.

The report says third-party litigation funders should also be required to cover defendants’ costs, including any adverse awards, if litigation is unsuccessful, whilst calling for greater transparency in the sector.

Commenting on the EU parliament’s endorsement, Voss, an MEP with Germany’s Christian Democratic Union, said regulation is needed to cap the “astronomical and unjustified rewards of litigation funders”.

“We must guarantee that our justice system continues to serve the people and is not exploited by profit-seeking actors,” Voss said, as he warned of the “recent and rapidly expanding global trend of hedge funds investing in legal proceedings in order to make enormous profits on the back of ordinary people.”

However, lawyers and litigation funders hit back at Voss’ proposals, as they argued regulation will hinder growth in the legal sector and limit access to justice.

Gary Barnett, Executive Director of the International Legal Finance Association (ILFA) warned stringent regulation “could limit the availability of and increase the cost of funding, which provides access to justice and upholds the rule of law.”

David Greene, head of finance litigation at London law firm Edwin Coe, argued significant “competition in the market” for third-party funding already “regulates” pricing in the sector.

Robert Hanna, managing director at litigation financier Augusta, said prices are also kept low by the relative sophistication of corporate clients, as he noted a large proportion of litigation funders’ clients are large corporations that “know the price they are prepared to pay”.

Hanna warned regulation of the litigation financing sector could hinder the UK’s legal sector’s growth, in the face of “a huge opportunity for UK plc to be the jurisdiction of choice for commercial disputes”.

Julian Chamberlayne, a partner at Stewarts, said regulation could “make it even more difficult” for “David vs Goliath” class-action lawsuits to progress, due to the costs associated with launching a major case against a well-funded corporate entity on behalf of a disparate group of people.

Third party funding paired with new laws allowing “opt-out” lawsuits has seen the UK become Europe’s leading jurisdiction for class action lawsuits, including cases against major firms such as Apple and Mastercard

Greene said many class action lawsuits “would not be possible were it not for the financing industry” due to the complexities of bringing a claim on behalf of a potentially extremely large group of individuals.

Regulation in the EU could however further boost the UK’s leading position as a hub for class action lawsuits, Chamberlayne said, as he suggested law firms may increasingly turn to Britain to file claims.

Read more:
Legal sector hits back at EU calls for regulation of third-party litigation funders

Google faces a €25bn (£21.6bn) lawsuit in the UK and EU that accuses the tech firm of anticompetitive conduct in the digital advertising market.

The company, which is a key player in the online ad market as well as being a dominant force in search, is accused of abusing its power in the ad tech market, which coordinates the sale of online advertising space between publishers and advertisers.

“Publishers, including local and national news media who play a vital role in our society, have long been harmed by Google’s anticompetitive conduct,” said Damien Geradin, of the Belgian law firm Geradin Partners, which is involved in the EU case.

“It is time that Google owns up to its responsibilities and pays back the damages it has caused to this important industry. That is why today we are announcing these actions across two jurisdictions to obtain compensation for EU and UK publishers.”

The UK law firm Humphries Kerstetter is planning to bring a case to the competition appeal tribunal over the next month, although the process could take years to reach a conclusion. The UK competition watchdog is also investigating Google’s power in the digital advertising technology market.

Toby Starr, a partner at Humphries Kerstetter, said the claim, which aims to recover advertising revenue lost due to Google’s allegedly anticompetitive behaviour over a period of years, would not just be aimed at benefiting news sites.

“This important claim will represent a class of victims of Google’s anti-competitive conduct in ad tech who have collectively lost an estimated £7bn. This includes news websites up and down the country with large daily readerships as well as the thousands of small business owners who depend on advertising revenue – be it from their fishing website, food blog, football fanzine or other online content they have spent time creating and publishing.”

The UK claim will be “opt out”, meaning that affected parties will be automatically treated as part of the claim, while the EU claim will be lodged in the Netherlands will be “opt in”, meaning would-be claimants need to apply to join the suit. Starr said he expected “many thousands” of parties in the UK to be part of the claim.

The combined suits are seeking total compensation that, according to estimates from legal representatives, could reach €25bn. The suits are being financed by litigation funding firms in the UK and the Netherlands, which take a cut of any proceeds from a successful case.

A spokesperson for Google said: “Google works constructively with publishers across Europe – our advertising tools, and those of our many adtech competitors, help millions of websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers. These services adapt and evolve in partnership with those same publishers. This lawsuit is speculative and opportunistic. When we receive the complaint, we’ll fight it vigorously.”

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Google faces €25bn lawsuit in UK and EU over digital advertising

Instagram owner Meta has been fined €405m (£349m) by the Irish data watchdog for letting teenagers set up accounts that publicly displayed their phone numbers and email addresses.

The Data Protection Commission confirmed the penalty after a two-year investigation into potential breaches of the European Union’s general data protection regulation (GDPR).

Instagram had allowed users aged between 13 and 17 to operate business accounts on the platform, which showed the users’ phone numbers and email addresses. The DPC also found the platform had operated a user registration system whereby the accounts of 13-to-17-year-old users were set to “public” by default.

The DPC regulates Meta – which is also the owner of Facebook and WhatsApp – on behalf of the entire EU because the company’s European headquarters are in Ireland.

The penalty is the highest imposed on Meta by the watchdog, after a €225m fine imposed in September 2021 for “severe” and “serious” infringements of GDPR at WhatsApp and a €17m fine in March this year.

The fine is the second largest under GDPR, behind the €746m levied on Amazon in July 2021.

A DPC spokesperson said: “We adopted our final decision last Friday and it does contain a fine of €405m. Full details of the decision will be published next week.”

Caroline Carruthers, a UK data consultancy owner, said Instagram had not thought through its privacy responsibilities when letting teenagers set up business accounts and had shown an “obvious lack of care” in users’ privacy settings.

“GDPR has special provisions to make sure any service which targets children are living up to a high standard of transparency. Instagram fell foul of this when accounts of children were set to open by default rather than private.”

Last year Meta suspended work on a version of Instagram for children following revelations about the app’s impact on teen mental health.

Instagram said it was “pausing” work to address concerns raised by parents, experts and regulators. The move followed revelations from a whistleblower, Frances Haugen, that Facebook’s own research showed Instagram could affect girls’ mental health on issues such as body image and self-esteem.

Instagram has said that prior to September 2019, it had put user contact details on business accounts and had informed users during the setup process. Under-18s now have their account set to private automatically when they join the platform.

Andy Burrows, head of child safety online policy at NSPCC, said: “This was a major breach that had significant safeguarding implications and the potential to cause real harm to children using Instagram.

“The ruling demonstrates how effective enforcement can protect children on social media and underlines how regulation is already making children safer online.”

A Meta spokesperson said: “This inquiry focused on old settings that we updated over a year ago, and we’ve since released many new features to help keep teens safe and their information private.

“Anyone under 18 automatically has their account set to private when they join Instagram, so only people they know can see what they post, and adults can’t message teens who don’t follow them.

“While we’ve engaged fully with the DPC throughout their inquiry, we disagree with how this fine was calculated and intend to appeal it. We’re continuing to carefully review the rest of the decision.”

Read more:
Instagram owner Meta fined €405m over handling of teens’ data

The generation approaching retirement have been one of the most entrepreneurial in recent memory taking advantage of growth in the economy and extensive business opportunities.

But how does a family business survive the retirement or death of the founder, when every important decision has been made by that founder over the years and the founder’s family all have different attitudes towards the business and how they live their life?

The author is James Ward, Partner and Head of the Private Client team at Kingsley Napley LLP explains that family businesses are renown for creating capital value and reliable income streams. There is an opportunity for them to be passed down to the next generation free of Inheritance Tax on the founder’s death.  However, such companies are often reliant on the founder’s skills and personal relationships and therefore the transfer of the business needs to be done delicately.  As well as corporate planning advice to find the optimal structures for doing so, for example in terms of a revised shareholders agreement and governance, it is wise to marry this with private client advice covering succession and taxation issues.

A house or a share portfolio, which are often part of the residuary estate of an individual on their death, can be easily sold and the proceeds divided between any children. However, a family business is its own legal entity that will continue beyond the death of the founder.  It is crucial for the founder to consider how to deal with share transfers either during his or her lifetime or on their death.

Gifting of shares

Traditionally gifting was seen as a sensible approach. However, if the founder holds the majority of shares in their name, and these have the ability to cover the voting percentage for ordinary and special resolutions, the effect of splitting the shareholding into a number of smaller percentages can be problematic with family voting dynamics. It can make company governance unworkable.

There is a chance this could create the ability for some family members to block business sales or significant decisions such as dividend payouts and purchases, for example, and that this can change the landscape significantly from when the founder was making these decisions.  This can be very difficult after death but even worse if the founder is still alive and seeing the business not operating in a way that he or she would have wanted.

Therefore, the gifting of shares to children should be considered very carefully and often needs to be done alongside a shareholders agreement that prevents mismanagement of the business.  Quite often this is on death as opposed to during lifetime as, if business relief is applicable to the shares, then there will be no Inheritance Tax passing the shares down to children alongside a Capital Gains Tax uplift on the value of the shares to the probate value.  It should also be noted that a gift of shares in the founder’s lifetime is subject to the seven year gifting rule with a tax implication if the shares are sold within that period.

Trusts

An alternative solution is to use Trusts that keep the shareholding together, accompanied by  directions set out in a carefully drafted Letter of Wishes and well-chosen Trustees.

Trusts can be set up during lifetime or on death.  However, they should be done alongside a detailed shareholders agreement covering aspects including key decisions, dividend payments and so on.

Sibling rivalry & incentive plans

Another issue that often occurs is that one sibling is involved in the business and one is not.  This can be very difficult when business founders want their children to benefit equally as the person working within the business can become disincentivised if half of their hard work is benefiting their sibling who is doing something else.  In such circumstances one child taking on the reins of the family business is not an easy option and resentment can easily build up.

Solutions such as having a larger share of profits going to the sibling(s) working in the business or creating a meritocratic salary and bonus structure can be helpful.  It is also possible for shares to be awarded through long term incentive plans growth shares.  In the end it is important to protect the family member(s) involved in the business as the business will only continue if the key decision makers are incentivised.  In that respect a family business is not unlike any other business.

Exit

Sometimes the prospect of the founder handing over the business to family is not feasible and an exit needs to be considered.  An exit can take many different shapes including Employee Ownership Trusts, trade sale to competitors, Private Equity involvement or some form of joint venture and investment with another organisation to provide a larger and more commercialised management structure and share register.

The Inheritance Tax implications here require careful planning. When it comes to Inheritance Tax an exit is often better done post-death as Inheritance Tax can be mitigated. Any exit before the death of the founder would see shares turn into cash which would be taxed at 40%.

In my experience what is most crucial when it comes to family businesses and succession planning is to make sure that all of the family are involved in the process.  Things can go awry when done deals are presented to family members because they do not feel they have been consulted and  often end up being disappointed.

Open dialogue between family members and an unemotional decision-making process about the future of the business is absolutely key and should ideally be done many years in advance of a retirement or succession plan.

Having the correct governance in place surrounding board meetings, shareholder meetings and shareholder agreements are also crucial so that there is a framework in place that provides certainty for the future of the business and to help avoid family disputes.

Read more:
Key considerations for succession planning for business owners

The recent case of Ocado v McKeeve highlights the importance of maintaining proper data retention policies so employees have a clear understanding of the procedures they need to follow.

Search orders and disclosure in litigation should always be borne in mind. Here, Deborah Ruff, Head of International Arbitration, Charles Golsong, Counsel, and Charlotte Stewart-Jones, Associate, at Pillsbury Winthrop Shaw Pittman LLP, explains more.

What are search orders?

Search orders are a form of injunction. Akin to measures available in criminal proceedings, they require a defendant to legal proceedings to allow the claimant’s representatives to enter (unannounced and usually at dawn) the defendant’s premises and search for, copy and seize documents and other materials.

What is disclosure?

Disclosure requires parties to make available to each other evidence which either supports or undermines the parties’ cases. Each party makes requests of the other which must then (subject to limited grounds whereby documents or parts thereof can be withheld from disclosure) disclose the documents, even where these are harmful to its case.

Failure to comply with search orders and/or disclosure can lead to sanctions, including contempt of court, a finding of which can result in a prison sentence.

What happened in Ocado v McKeeve?

A co-founder of Ocado, Mr Faiman, left the business in 2010. Mr Faiman subsequently incorporated Project Today Holdings Limited, which was intended to compete with Ocado.

Mr Faiman had been in contact with a senior employee of Ocado, Mr Hillary, while engaged in discussions with Waitrose and Marks & Spencer. Ocado had a pre-existing relationship with the former and was engaged in negotiations with the latter. Mr Hillary subsequently resigned from Ocado and accepted a role with Today. He was placed on gardening leave by Ocado a week after he resigned but remained an employee of Ocado.

Ocado obtained a search order in support of proceedings against Today, Mr Faiman, and Mr Hillary concerning allegations that Mr Hillary had provided confidential information to Today and/or had been working for Today while still employed by Ocado.

Shortly after the search order was served on Mr Faiman, he contacted his solicitor, Mr McKeeve. Mr McKeeve spoke to his client briefly and to the supervising solicitor. Following that conversation, Mr McKeeve sent a message saying “burn it” to Today’s IT manager on an application called 3CX. Mr McKeeve followed up this message with a phone call to Today’s IT manager to confirm that he wanted him to delete the 3CX application. The IT manager carried out this instruction and the 3CX application and its contents were irretrievably destroyed.

Although he had not seen the search order and was not a respondent to it, Mr McKeeve was nevertheless found to be in contempt of court. As a result of his intervention, the 3CX application had been irretrievably destroyed. Finding that his act had not been inspired by a conspiracy, the judge considered that Mr McKeeve’s actions were a “spontaneous act of colossal stupidity”, and the judge found that Mr McKeeve knew that the purpose of the search order was to require a search of the application to be carried out and that his intention had been to prevent it being searched. He thus interfered with the due administration of justice.

A judge will decide on the potential sanction later this year, which may include a custodial sentence.

Ensuring compliance with data obligations

This case demonstrates the importance of having effective data procedures in place. Human judgement can be impaired in stressful situations, and, in the absence of clear guidance, individuals may react improperly, which can have serious repercussions for the organisations and individuals involved. To mitigate this risk, organisations should have clear data retention policies which address how employees should manage data held by the organisation from creation until disposal. Employees should be given training to ensure they are familiar with the policies and have a clear understanding of what action must (and must not) be taken.

Data retention policies can assist organisations to comply with their legal and regulatory obligations, which may include the following:

Litigation

The Civil Procedure Rules require a person who knows that it is or may become party to proceedings to take reasonable steps to preserve documents in its control that may be relevant to any issue in the proceedings (paragraph 3.1 of Practice Direction 51U).

Regulatory requirements

Organisations and persons operating in regulated professions are likely to be subject to additional obligations to preserve data and will need to ensure compliance with those requirements.

Data protection

The retained version of the General Data Protection Regulations and the Data Protection Act 2018 impose legal obligations on data controllers. Data retention policies can help organisations demonstrate compliance with principles of data minimisation and storage limitation (although additional data protection policies, including an appropriate policy document will be required to ensure full compliance with the GDPR and DPA).

The Companies Act 2006:

The Companies Act 2006 requires companies to keep certain records, including minutes of all meetings of directors, which must be kept for at least 10 years from the date of the meeting (section 248).

The Act also requires companies to keep records of resolutions passed by members of the company, minutes of general meetings and records of decisions by a sole member, which must be retained for a period of at least 10 years from the date of the resolution, meeting or decision (sections 355 and 357), as well as accounting records (section 386) and copies of instruments creating or amending charges (section 859P).

Tax

Companies are required to keep adequate records to comply with tax requirements and to provide documents or information requested by HMRC.

Data retention best practice

Data retention policies can also assist organisations with general efficiency and good practice by ensuring relevant data is properly retained and therefore available when needed and that unnecessary and irrelevant data is not retained unnecessarily. Data retention policies should be reviewed and, if necessary, amended to reflect changes in circumstances and potential risks and compliance should be monitored.

Read more:
A “spontaneous act of colossal stupidity” – why document retention deserves your attention

Athletics icon Usain Bolt has moved to trademark a logo showing his signature victory celebration pose.

The retired Jamaican sprinter submitted an application in the US last week.

He is known globally for the move – in which he leans back and gestures to the sky – as he routinely struck the pose after winning gold medals and setting world records.

Mr Bolt still holds the world records for the 100m and 200m, making him the fastest man in history.

According to the US Patent and Trademark Office, Mr Bolt filed his application for the trademark on 17 August.

It depicts “The silhouette of a man in a distinctive pose, with one arm bent and pointing to the head, and the other arm raised and pointing upward”.

He intends to use the image on items including clothing, jewellery and shoes, as well as restaurants and sports bars, the filing shows.

“Given that Bolt is now retired from racing, it makes sense that he would look to expand his business empire,” Josh Gerben, a Washington DC-based trademark lawyer, told the BBC.

“The silhouette of his victory pose is recognised around the world. This trademark registration would enable him to offer the items listed in the application himself, or license the right to use the trademark to third parties,” Mr Gerben said.

Mr Bolt applied to register a similar trademark 12 years ago, but this has since lapsed under US law.

The eight-time Olympic gold medallist retired from athletics at the 2017 World Championships in London.

He could only manage bronze in his penultimate race – the men’s 100m – before pulling up injured just as he began to hit top speed at his final event, the 4x100m relay.

When asked if he would consider a return to racing, he replied: “I’ve seen too many people retire and come back just to make it worse or to shame themselves. I won’t be one of those people.”

Read more:
Usain Bolt moves to trademark signature victory pose

It is understood that TSB Bank is facing a legal action worth up to £800m, brought by customers who claim they were locked into mortgages with ‘excessively high’ interest rates.

Today, six years to the day since TSB bought £3.3bn mortgages from Northern Rock, approximately 200 homeowners whose mortgages have been administered by TSB’s ‘Whistletree’ brand have issued claims for around £50,000 each in overpaid interest.

Harcus Parker, a law firm of specialist group action solicitors which is bringing the case in the High Court, confirmed this morning that up to 27,000 people could ultimately join the Whistletree claims litigation.

Since TSB bought the loans, the lawyers said it has charged its Whistletree customers almost double the rates charged to its other customers.

“Until recently, it had also refused to allow these ‘mortgage prisoners’ to access to ‘ordinary’ TSB fixed-rate deals on the same basis as its other customers,” a statement shared with this paper read.

“Many of these borrowers have unblemished repayment histories, but have been unable to move to another lender because they would not qualify under new, stricter affordability requirements imposed by regulators.”

Anybody whose mortgage has been administered by ‘Whistletree’ is eligible to claim, the firm stressed.

Customers who took out a ‘Together Mortgage’, which allowed borrowers to access lending of up to 125 per cent of the value of their homes, may be able to seek additional compensation.

“At a hearing at the Chancery Division of the High Court will be asked to make a Group Litigation Order, consolidating the claims and making it possible for anybody who has ever had a mortgage administered by ‘Whistletree’ to seek compensation,” according to the statement.

in response to the action TSB said “it is aware of potential action proposed by Harcus Parker and will robustly defend its position.”

A spokesperson shared: “We are committed to treating our Whistletree customers fairly. TSB took ownership of the Whistletree mortgages in 2016 and subsequently created access to product transfers for customers who did not previously have access to them. Since then, over two-thirds of Whistletree customers have either transferred to a new Whistletree product or closed their mortgage with Whistletree. We write to customers twice a year to remind them about the opportunity to switch.”

Read more:
Northern Rock customers sue TSB for £800m after being trapped in high-interest mortgages

In line with the current focus on sustainability, the Government introduced a new tax on plastic packaging (“PPT”) from 1 April 2022.

In a clear attempt to incentivise businesses to import and manufacture recycled plastics, PPT will apply at a rate of £200/tonne on plastic packaging with less than 30% recycled plastic.  The tax kicks in at a threshold of 10 tonnes per annum: if you manufacture or import plastic packaging or pack goods into plastic in the UK, then your business will be within the scope of the tax if it does not meet the above criteria.

‘Plastic’ is defined widely and includes biodegradable, compostable and oxo-degradable plastics.

What do businesses need to do?

Establish whether your plastic packaging is within scope

In the vast majority of cases, it will be clear whether or not an item is plastic packaging, but remember that the definition is broad and so it is helpful to check the HMRC flowchart and guidance to assist with this – see: https://www.fdf.org.uk/globalassets/resources/public/general/ptf-060-21-a1.pdf.

For example, packaging that is integral to the goods is exempt from the tax because the packaging is necessary to enable the customer to use the goods.  Items such as water cartridge filters or tea bags fall into this category.

There are several other situations where exemptions are granted. Some of these are available as tax credits if they can be proved later (e.g. the plastic is exported or converted into a new component). As a result, import/export and logistics companies, in particular, may be able to significantly reduce their exposure with the right recording processes.

Register for PPT

Businesses that have imported or manufactured 10 tonnes or more of finished plastic packaging since 1 April 2022 or that expect to import or manufacture 10 tonnes or more of finished plastic packaging in the next 30 days must register for PPT at the earliest date possible.

If you do not meet the threshold on either of these tests, you should, in any event, record the amount of plastic imported or manufactured to demonstrate that you are outside of the scope of PPT.  This is because other businesses in your supply chain will want evidence of your status in relation to PPT for their own record-keeping requirements.

Record plastic usage

The reporting aspects of the tax will need to be considered by the operations/logistics functions and finance teams of businesses. Robust evidence is required to prove a 30% recycled content, and companies are expected to keep records evidencing:

• the origin and content of the recycled material;
• the date the plastic was manufactured;
• the proportion of the recycled plastic contained in the output materials of the recycling process.

Supply agreements should require such evidence to be provided where appropriate and seek to secure the necessary indemnities.

These requirements may initially be onerous for some businesses, but creating a clear framework for auditing the usage of recycled plastic should also enable those companies seeking to minimise their use of ‘virgin plastic’ to publicise that fact. Outside of the obvious self-reporting opportunities, the sustainable sourcing and recycling of materials such as plastic are key performance indicators in the Loan Markets Associations’ Sustainability-Linked Loan Principles. Sustainable plastic use is also factored into the impact assessments of companies applying for B Corp certification, a growing movement of businesses that give equal weighting to people, the planet and profit.

As a tax introduced to incentivise sustainable and environmentally friendly practices, the more the tax increases consumer knowledge and competitive pressure on businesses to improve their sustainability credentials, the more likely it is to be considered a success.

Other considerations

Businesses are permitted to pass on the cost of PPT to customers.  Any price increase, though, will have VAT and corporation tax implications. Therefore, companies should consider these projections in advance of passing the cost on, particularly if there are questions about whether the company will be claiming PPT tax credits and/or whether the company will be able to reclaim any additional VAT.

Take advice

If it is not clear what the implications of PPT will be on your business, or you are considering updating your materials to cover your new reporting responsibilities in relation to PPT, it’s worth taking professional advice. This is particularly important because as the tax beds in, the approach that HMRC is likely to take to applying and treating the tax is not yet clear.

Read more:
Time to get serious about reducing, reusing and recycling

The UK’s data watchdog has fined a facial recognition company £7.5m for collecting images of people from social media platforms and the web to add to a global database.

US-based Clearview AI has also been ordered to delete the data of UK residents from its systems by the Information Commissioner’s Office (ICO). Clearview has collected more than 20bn images of people’s faces and data from Facebook, other social media companies and from scouring the web.

John Edwards, the UK information commissioner, said Clearview’s business model was “unacceptable”.

“Clearview AI Inc has collected multiple images of people all over the world, including in the UK, from a variety of websites and social media platforms, creating a database with more than 20bn images.

“The company not only enables identification of those people, but effectively monitors their behaviour and offers it as a commercial service. That is unacceptable. That is why we have acted to protect people in the UK by both fining the company and issuing an enforcement notice,” he said.

The ICO, which conducted the investigation in tandem with its Australian counterpart, the Office of the Australian Information Commissioner, had announced a “provisional” intention to fine Clearview £17m last November. Announcing its provisional decision, the ICO said Clearview’s technology had been offered on a “free trial basis” to UK law enforcement agencies, although that trial has been discontinued.

Clearview’s services are no longer being offered in the UK but the ICO said on Monday it still had customers abroad so was still using the data of UK residents.

Clearview customers can upload an image of a person to the company’s app, which is then checked against a database. The app then provides a list of images deemed similar to the photo provided by the customer, with a link to the website where the image came from.

The ICO said Clearview broke UK data protection laws in several ways, including: failing to use information of UK residents in a fair and transparent way; failing to have a lawful reason for collecting that information; and failing to have a process in place to stop the data being retained indefinitely. It added that Clearview had asked for additional information from people, including photos, when they had contacted the company to ask if they were on the database. The ICO said this may have put off people who wished to object about their presence on the database.

Last week Clearview agreed to permanently stop selling access to its face database to private businesses or individuals around the US. The New York-based company will continue offering its services to federal agencies, such as US Immigration and Customs Enforcement, and to other law enforcement agencies and government contractors outside Illinois, where the lawsuit was brought.

Read more:
UK watchdog fines facial recognition firm £7.5m over image collection

A country pub has received a framed apology from a fashion publishing giant after being threatened with legal action unless the landlords changed its name.

The Star Inn at Vogue was sent a cease-and-desist letter by Vogue’s publisher, Condé Nast, which claimed a link between the two businesses was “likely to be inferred”.

The pub has stood in Vogue, a Cornish village, for hundreds of years, while the magazine was not founded until 1916.

Condé Nast, which also owns The New Yorker, GQ, Vanity Fair and Wired, has since backed down, sending the pub a framed version of their apology.

Its parcel also included a handwritten note, which read: “From one Vogue to another – please accept our apologies.”

The pub’s landlord, Mark Graham, said he was taken aback by the response to news of the original letter after people from around the world, including Germany, the Netherlands, Australia and the US, got in touch to offer support.

He told the BBC: “I received a letter this morning from a man in his 90s in a care home in London, an ex-Penzance man who said it has brought a little tear in his eye because it reminded him of Cornwall and how rebellious the Cornish are, and how you can’t push them around.

“A few people have said, ‘I’ve never heard of your pub, but if I’m in Cornwall it is now on my bucket list to come and visit you’.”

Graham joked that the village had come up with a few ideas to “poke fun” at the publisher, which included starting a similarly titled parish magazine, and rearranging a version of Madonna’s hit song, Vogue, to be performed by “some of the village’s larger, hairier men in skimpy clothing” at this year’s ale festival.

He added: “To be honest I don’t think they [Vogue magazine] have done too badly out of this mistake either. We are all friends now.”

Condé Nast said its team, who “regularly monitor” the use of the name Vogue, were alerted through Companies House. They admitted that “further research” would have identified that a letter was inappropriate in this instance.

Graham and his wife, Rachel, bought the pub 17 years ago after going out for a bike ride and finding it closed for the afternoon.

Nicknamed “the Vogue” by locals, it is adorned with maps of the local area circa 1800, and has remained largely unchanged over the centuries.

Read more:
Cornish pub receives framed apology from Vogue publisher after name row