Cohen -v- Google not a skank decision

New York Supreme Court

There has been a degree of consternation in the blogging community about the New York Supreme Court decision in the Liskula Cohen -v- Google, Inc “skank” case, given that it requires Google to disclose the identity of a blogger, subsequently revealed to be Rosemary Port.   The decision has even been described in some UK press as a precedent-setting case.

This is a surprise, given that the Supreme Court appears merely to have applied the facts of the case to Civil Procedure Law Rules 3102(c).  Having determined that calling Miss Cohen a “skank” and “ho” etc., together with posting sexually provocative photographs of her, amounted to actionable defamation, the Court then applied the rule to enable Miss Cohen to obtain a court order “to identify the proper defendant with respect to a known cause of action”.

In the English Civil Procedure Rules there is no direct equivalent of the New York CPLR 3102(c), at least as a means to identify an unknown defendant.  Instead, the court does have jurusduction following a House of Lords’ decision in Norwich Pharmacal -v- Commissioners of Customs & Excise [1974] AC 133, using what is now commonly referred to as a “Norwich Pharmacal order”.   Norwich Pharmacal orders have been made in similar circumstances, i.e. to obtain the account details from internet service providers of alleged authors of defamatory material on the internet (see Totalise plc -v- The Motley Fool Ltd [2001] EWCA Civ 1897, Keith-Smith -v- Williams [2006] EWHC 860 (QB) and Sheffield Wednesday -v- Hargreaves [2007] EWHC 2375 (QB)).

The outcome of the Cohen case should therefore not be a surprise to UK bloggers.

When is an agent a "commercial agent"?

Sometimes we have sympathy with the commercially-minded view that lawyers are a waste of money.  The recent example of money apparently being wasted on legal fees is the Court of Appeal case of Sagal (trading as Bunz UK) -v- Atelier Bunz GmbH.

The case involved a UK sole trader in the jewellery business, who traded using part of the name of his German supplier, Atelier Bunz.  Despite the fact that orders were separately received and invoiced by Bunz UK to customers, and by Bunz GmbH to Bunz UK, with each invoice being subject to the invoicing company’s terms and conditions, Mr Sagal claimed that he was in fact a commercial agent. As a commercial agent, he would have been entitled to compensation upon termination of any agency under the Commercial Agents Directive 86/653/EEC, implemented in the UK by the Commercial Agents (Council Directive) Regulations 1993. The basis of his claim was that he had authority to negotiate sale of jewellery on behalf of Bunz GmbH and that his prices, being a fixed mark-up from Bunz GmbH’s prices, meant that he had no discretion over pricing and in effect received a commission of a fixed percentage of Bunz GmbH’s prices.

Our subjective view that this claim was fruitless, and thus a waste of court and legal fees, is based upon the clear wording of regulation 2(1) of the 1993 Regulations, which defines a commercial agent as:

a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the “principal”) or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal.

We would have had great difficulty in matching the facts to this definition to believe there was merit in the claim.  As the Court of Appeal subsequently found, as Mr Sagal did not have the authority to contract in the name of Bunz GmbH as well as on its behalf, he was not a commercial agent.  He did not contract in the name of the principal and his retail prices were not in fact fixed by Bunz GmbH.

This case should be a warning to agents who work for undisclosed principals, a situation that it not uncommon under English law as it has certain VAT advantages.  These agents will not, on the face of Regulation 2(1), be commercial agents.

Charges for CPS set-up: stitch up and screw up?

CPS Timeline

The history of Carrier Pre-Selection (“CPS”) in the UK (as depicted in the timeline above) may be considered to be a bit of a special interest.  However, the conclusions that may be drawn from Ofcom’s review of CPS set-up charges, following a long-running dispute between CPS operators and BT,  may be of wider interest.

BT became subject to a requirement to provide cost-orientated CPS under an SMP condition made under the new Communications Act 2003 regime on 28 November 2003 (the “First Date” labelled on the timeline).  Ofcom ruled in a Determination dated 13 February 2009 that BT had included the retail costs in dispute in breach of that SMP condition.  BT was ordered to reduce its CPS set-up charge by 78p to £1.69 per customer (a reduction of over 31%) from the date of the Determination (the “Third Date” labelled on the timeline).

However, in a Further Statement dated 6 July 2009 Ofcom decided not to order BT to make any repayment of the overcharges, even though in a draft determination included with the February 2007 Determination, it had proposed ordering BT to make repayments from the date when BT ought to have known that the retail costs were inappropriately being included in the CPS set-up charge, determined to be from the date that the current CPS charges were announced (1 November 2007, the “Second Date” labelled on the timeline).

This is a slightly troubling decision by Ofcom.  It appears to imply that there is no strict liability for breach of an SMP condition.  BT, in the absence of any guidance or ruling from Ofcom, was judged to have reasonably included the disputed retail costs in the CPS set-up charges.  Ofcom accepted BT’s subjective view of what was reasonable in November 2003 and November 2007.  Nowhere in the draft or final determinations is the aggregate amount of the CPS overcharges set out.  However, assuming that the overcharge was 78p for each of the 4,000,000 CPS customers in the UK, it can be estimated that the overcharge gave BT a benefit over 6 years in the order of £3m.  Whatever the actual benefit to BT, this must have been a relevant factor for Ofcom in determining whether their approach was appropriate and proportionate.  It is therefore surprising not to see any indication of the BT benefit in the Determination.

Ofcom avoided reviewing the impact of BT’s overcharging, the so called “competitive distortion”, without much justification.  Ofcom also avoided analysing the fact that BT, in recovering retail costs from CPS operators that they were not themselves able to recover, was arguably acting in a discriminatory manner in breach of a more general non-discrimination SMP condition.

It can therefore be argued that in getting away with overcharging CPS set-up costs since 2003, BT has well and truly stitched up the CPS operators. 

It can also be argued that in:

• not providing clear guidance to BT on what costs could be included in CPS charges in 2003; or
• not carrying out the retail costs review promised in August 2005 for 2006; or
• not carrying out a discrimination or “competitive distortion” analysis in the 2009 CPS determinations;

with the result that BT was able to overcharge for CPS and not be required to repay any of these overcharges, Ofcom has screwed up.

If you would like a copy of the CPS Timeline, email us at critique@charlesrussell.co.ukand we will send you the Excel timeline by return.

Skype -v- Joltid: Ebay did their IPR due diligence?

As the VoIP peer-to-peer telecommunications service Skype is almost universal (currently almost 13m users online at the time of this post), there has been quite a bit of excitement about the recent Securities and Exchange Commission quarterly filings made by Ebay, Inc, the owners of Skype Technologies SA.  In the April 2009 and July 2009 filings Ebay has reported that it is in dispute with Joltid Limited, the original sellers of Skype to Ebay for $2.6billion.

In a smart bit of forum shopping, Skype has brought a case against Joltid in the English High Court, with Joltid making a counterclaim that alleges, amongst other things, that the licence agreement between the parties has been terminated.  Continued possession and use of Joltid’s Global Index peer-to-peer software technology by Skype would therefore be an infringement of Joltid’s copyright in that software.  The SEC filings describe how a successful counterclaim by Joltid could ultimately shut down Skype, unless Ebay/Skype can develop alternative software before the outcome of the court case.  The case is reported to be listed for a hearing in June 2010.

Although there is a lot of comment on the case in the public domain and on the Internet, it is not entirely clear what the cause of action is for Skype’s claim in the High Court.  It appears that Skype has got in first at the High Court, seeking declaratory relief that it is not in breach of its software licence with Joltid.  From the counterclaim, it appears that Joltid believes that Skype has breached the software licence by disclosing some of the Global Index source code in defence of various patent actions in the US, including by order of US courts.  Until the software licence is disclosed in the public domain, however, the actual cause will remain a subject of speculation.

Although there may be some commercial manoeuvring going on here, given that Joltid are reported to be looking to buy Skype back from Ebay, this does suggest an obvious lesson.  When buying a company that has a successful product or service that is highly dependent upon a key technology or other intellectual property, it serves to do a thorough job on the intellectual property rights’ due diligence.  If the relevant intellectual property rights’ licences are not irrevocable, the buyer should be absolutely clear about the licensor’s rights to terminate the licences, and the effect on the business if any licence were terminated, before completion of the sale.

One would hope that Ebay did a thorough examination of the software licensing between Skype and Joltid, for example, so that the reports of a purported termination of the Jolitd licence in their SEC filings are merely precautionary.

Data protection: where are the fines?

Regular readers of this blog (thank you!) will know that we consider the Information Commissioner’s lack of enforcement and regulatory powers to be a serious deficiency in the UK’s data protection and privacy law.

To emphasise the point yet again, the Information Commissioner has published details of the enforcement notices issued against 14 construction companies arising out of the misuse of personal data collected and sold by Ian Kerr trading as the Consulting Association. There are some big names listed in the Information Commissioner’s press release. The enforcement notices demand that the construction companies stop using Ian Kerr personal data, and comply with certain obligations that they already had under the Data Protection Act 1998.

Despite these serious breaches, there are no fines or compensation orders, as the Information Commissioner does not have the power to award fines or make orders. Have the construction companies got away with their blatant breach of the Data Protection Act 1998? Perhaps, but at least the enforcement notices contain an interesting final warning. In setting out in the notices that the construction companies must comply with certain data protection obligations, the Information Commissioner has ensured that any further breach of these obligations would also be a breach of the relevant enforcement notice.

Breach of an enforcement notice is a criminal offence. In addition, where that offence “has been committed by a body corporate and is proved to have been committed with the consent or connivance of or to be attributable to any neglect on the part of any director, manager, secretary or similar officer of the body corporate or any person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence and be liable to be proceeded against and punished accordingly” (section 61(1) of the Data Protection Act 1998).

The officers of the 14 construction companies subject to these Ian Kerr enforcement notices ought to bear this in mind.