The European Court of Justice ruled in October 2015 that its ‘safe harbour’ agreement with the US, that allowed the transfer of EU citizens’ data to the US, is no longer valid because it does not adequately protect consumers. This decision was made in the wake of the Edward Snowden revelations regarding mass surveillance by the US government of personal data held in the US. Now this agreement has been considered invalid, US companies can no longer rely on self-certification and must find another means to guarantee an adequate level of protection.

Companies most likely to be affected are those which use US-based cloud services to store or process their personal data. They will need to consider other options, such as seeking consent from data subjects, using BCRs (binding corporate rules) for intra-group transfers or getting the US cloud providers to sign up to EU approved ‘model’ contract clauses (which guarantee an adequate level of protection).

As a result of this ruling, businesses that are transferring personal data to the US could find themselves in breach of the 8th principle of the Data Protection Act 1998. This could lead to investigation by the Information Commissioner, fines and unwanted media attention. In order to reduce the risks posed by this we advise you to:

  • Carry out an assessment of what personal data you transfer to the US (through the Safe Harbour arrangement). Do not forget to check the location of any subcontractors that your suppliers use in the background!
  • Assess and put in place the most suitable alternative to Safe Harbour; and
  • For sensitive data, use encryption if possible when transferring personal data to the US as this anonymises the data which means it is not caught by the legislation.

We can review your commercial contracts with US suppliers/subcontractors and advise on a suitable alternative to Safe Harbour. Contact Claire Jacques on 01235 836643 or [email protected] if you would like to discuss.

Commercial Contracts – law on penalty clauses reviewed

Parties to a commercial contract often agree to financial remedies, such as service credits and liquidated damages, to compensate them for delay or poor service provision. Until recently, these clauses were only enforceable by law if they represented a genuine pre-estimate of the loss that the party would suffer as a result of the other’s breach. If the remedy stated was excessive and/or punitive, it would be considered a penalty and therefore unenforceable by law.

The Supreme Court has now held that the true test as to whether these clauses are penal is to consider whether it is out of all proportion to the innocent party’s legitimate interest when enforcing the other party’s obligations under the contract. The Supreme Court also clarified that a clause may fall outside the rule against penalties if it takes effect as a primary obligation rather than as a consequence of breach of contract. The judgment is a welcome clarification of the law in this area as it restores the ability of parties to make their own bargains and confirms the court's role in enforcing those bargains.

We can support you in the negotiation of your service contracts to ensure your business understands and can benefit from this landmark judgment. Contact Claire Jacques on 01235 836643 or [email protected] if you would like to discuss.

Employment news

Mobile Employees with no Fixed Workplace

The Court of Justice of the European Union (CJEU) has handed down a decision which provides guidance to organisations operating a mobile workforce on whether the time spent by their employees on their first and last journey of the day should count as ‘working time’.

The case, a reference to the CJEU from the Spanish courts, involved security system technicians who were required to attend sites within an ‘assigned’ geographic area, without any need to attend the Company’s offices. The technicians argued that the first and last journey of the day should be classed as forming part of their working time. The CJEU agreed with the technicians on the basis that the employees were at the Company’s disposal from the moment they were on the road, as it was not uncommon for the Company to change the order of customers or to cancel appointments altogether. This could have a significant impact on organisations for the purposes of calculating rest breaks, rest periods and wages. It also begs the question, what would prevent such an employee moving further afield and continuing to be entitled to treat their first and last journey as amounting to working time.

Case reference: Federacion de Servicios Privados del sindicato Comisiones Obreras v Tyco Integrated Security SL and another.

Modern Slavery Act 2015

With effect from October 2015 all commercial organisations with a UK presence and a global turnover of £36 million or more now have to complete a slavery and human trafficking statement for each financial year. The Modern Slavery Act consolidates offences relating to trafficking and slavery (both in the UK and overseas). It includes a provision for large businesses to publicly state the actions they are taking to ensure that slavery and human trafficking is not taking place in any of its supply chains, or in any part of its business. For more information see the Publications section on our website.

For more information on the above or to discuss any other employment issues, contact Ben Hegedus on 01235 836609 or [email protected].

Intellectual Property news

Two recent cases have highlighted the importance of using written contracts to capture the terms of any commercial arrangement and the need to ensure those contracts are properly drafted. The first involved an argument over ownership of the copyright in various Bob Marley tracks. The case centred on the wording of an assignment of rights to Mr. Marley’s works to his record company. Mr. Marley had misattributed the music and lyrics from certain songs to other artists allegedly as a way of trying to avoid royalties going to his record company. The assignment did not list the relevant songs, but did purport to assign all musical compositions written and recorded by Marley. There were definitions of ‘Compositions’ and ‘Catalogue’ but the question was whether these definitions covered the misattributed songs. Each side raised complex arguments over the interpretation of the language in the agreement and the background facts, but in the end the Court of Appeal held that assignment did include the misattributed songs.

In the second case, the Intellectual Property Enterprise Court (IPEC) rejected a claim for copyright infringement and passing off by the owners of a jewellery business against a prospective joint venture partner. The parties had been exploring a joint venture relating to the jewellery business and the claimant had indicated to the defendants that they could use their brand and a particular photograph for any purpose which they might reasonably consider to be for the advancement of their joint enterprise. The defendants had placed advertisements about the proposed joint venture in the press and online. The parties then fell-out with each other and the claimant complained about the defendants’ use of the branding and photograph. The IPEC held that, although there was no written contract between the parties regarding use of the branding and image, there was an implied licence arising from the early joint venture discussions allowing the defendants to use them to advance the cause of the joint venture.

In each of the above cases a properly worded contract would have saved the parties a good deal of time, money and stress.