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In the twilight of 2014, at our final consulting editorial board meeting of the year, Lexis®PSL IP & IT invited industry experts from both private practice and in-house to comment on the most significant developments of the year and the issues, trends and technology which will have the greatest impact in 2015. Below we share some of their thoughts supplemented with material from Lexis®PSL.
Attendees were asked to comment on developments in relation to the particular industry sectors in which they specialise. So, to provide context for their comments, (and because it’s polite), our experts are introduced below:
Christian Bartsch, Partner, Bird & Bird
Christian is a partner in Bird & Bird’s Commercial Group, based in London, and joint head of the firm’s Financial Services Sector Group.
Andrew Bowler, Partner, Bristows
Andy is a partner in the Intellectual Property team in London, and advises clients across a wide range of technologies, including complex mechanical and FMCG products, electronics, medical devices, pharmaceuticals as well as music, films and other media.
Simon Briskman, Partner, FieldFisher
Simon is a partner in the Outsourcing, Technology and Telecoms team, and services clients in industries including TMT and energy.
Richard Brousson, General Counsel, British Film Institute
The BFI is a charity, which combines cultural, creative and industrial roles, bringing together the BFI National Archive and BFI Reuben Library, film distribution, exhibition and education at BFI Southbank and BFI IMAX, publishing and festivals.
Emma Burnett, Partner, CMS Cameron McKenna
Emma is a partner in the London Commercial team, with a practice focusing on data protection, outsourcing and technology.
Dan Byrne, Associate, Bristows
Dan is an IP litigation specialist, who qualified as a barrister at an intellectual property chambers in London, and has a scientific background.
Don Hughes, Vice-President & EMEA General Counsel, Hitachi Data Systems
HDS provides information technologies, services and solutions, with a focus on modular mid-range and high-end storage
Roland Mallinson, Taylor Wessing
Roland is a partner in the Trade Mark, Copyright & Media group of Taylor Wessing’s IP team in London.
Lawrence Milner, Regional Counsel for EMEA, Cadence Design Systems
Cadence is an electronic design automation software and engineering services company, specialising in silicon chip technology.
Tom Moody-Stuart, Barrister, 8 New Square
Tom's practice covers all aspects of Intellectual Property, Media & Entertainment and Information Technology law. His clients range from large brand owners and patent holders, media corporations, record companies and publishing houses to individual rights holders and start-up companies.
Emily Taylor, Director, Emily Taylor Consultancy
Emily is an author and internet governance expert. She is an Associate Fellow of Chatham House. She has worked in the domain name industry since the late 1990s, initially as a solicitor (now non-practising), and currently as a researcher and policy specialist. Her publications include the annual World Report on Internationalised Domain Names (lead author), various reports on Internet protocols for the UK regulator, Ofcom, and a review of ICANN's policy development process.
Cloud computing has changed the way many organisations think about delivering and receiving their information technology services. Although it’s a term fairly recently coined, cloud computing is not new. Generally, it describes a variety of data storage, processing, and application services, normally provided via the Internet by a third party using remote equipment. As our commentators discussed, it’s set to continue to prove a disruptive influence on business models and operation in 2015. This shift towards cloud computing presents particular challenges to established suppliers in the software and technology sector and raises issues for those customers in regulated industries who are keen to benefit from the cost savings its adoption can facilitate.
There is a big shift towards cloud consumption based solutions. When selling IT equipment to enterprise customers, they are frequently now wanting a ‘pay per use’ or managed services model. In terms of how this is reflected in IT spend, it means a move from Capex (eg selling equipment along with support services) to Opex (the customer buying a service). Some analysts are predicting that 40% of IT spend could be Opex within 2-3 years. As there is more pressure from customers to make hardware and software an operational expenditure it changes the way it is sold and suppliers must work from a different model to be able to sell profitably. Opex arrangements, such as pay per use, mean more risk for suppliers as contractual arrangements move towards a service level model. In any event, this means that work is increasing for lawyers! Secondly there is a move from customers buying servers, storage, networking and software separately and the customer itself making the different components work together towards customers buying a converged solution where the customer can ‘plug and play’.
Increasingly, companies want to put software they license on the Cloud to ensure more efficient use of computing resources. That potentially means a loss of control for software licensors. One way for companies to protect their products from unauthorised use is through use of embedded technology that records the transfer of licensed software to unauthorised servers. Some may question the need for this, but in reality this is a pragmatic measure to ensure use remains within the licence and as such this can be for the benefit of both customer and supplier.
One interesting impact of the increasing use of a subscription model for software is that it assists in the calculation of damages for infringement when the IP rights owner needs to enforce its rights.
There continues to be a real appetite amongst CTOs in the financial services sector to consider public cloud-based solutions to service the needs of their business. Expect to see continued efforts from cloud providers to offer solutions to the marketplace which purport to go at least some way in satisfying regulatory requirements. Such efforts may well tempt some financial institutions to either look at moving into the cloud or reconsider the risk-profile of their current cloud use. Regulators will review the generic guidance issued to date on the use of the cloud and will continue to look with interest to those jurisdictions where formal announcements have been or are made on the use of certain cloud offerings. Regulators, cloud suppliers and financial institutions will need to work together if increased use of the cloud in the financial services sector is to be seen as a competitive advantage.
The development of cloud computing is an integral part of the European Commission's Digital Agenda for Europe. Its increased adoption raises significant issues in areas such as Data Protection - for more see Timeline: tracking the EU data protection reform beast.
Subscribers to Lexis®PSL IP & IT have access to a topic area dedicated to Cloud Computing. Material dealing with issues associated with the Cloud and its implications includes:
“Big Data refers to both large volumes of data with high level of complexity and the analytical methods applied to them which require more advanced techniques and technologies in order to derive meaningful information and insights in real time”. This helpful definition from HM Government’s recent horizon scanning research paper and its classification of big data as one of the ‘Eight Great Technologies’ which will propel the UK to future growth underscores how significant its impact is considered to be. This view was largely echoed by our specialists, albeit with some carefully considered caveats, who raised interesting industry-focused applications for this emerging technology and some of the concerns regarding its use – see, for example Online privacy: Big Brother Plans from ICANN.
Every few years a new technology such as cloud, mobile apps or the internet of things occurs which throws up interesting legal conundrums and new opportunities. In the last couple of years, the massive increase in data capture and processing power to analyse it has done just that. "Big data" refers not just to the fact we have generated more information in the last couple few years than the rest of human history but also the fact we are learning to harvest that data to improve clinical decision making, cut down fraud or boost sales. The economic benefits can be staggering and new businesses are being created in the field every day. The kernel of big data is access to very large scale information in order to spot trends or predict results. Many sources of information were not designed for this purpose and whether a business can exploit personal data, purchased and public databases, social media or other sources comes down to a complex matrix of legal issues – data privacy, IPR and terms of access amongst them. What is more, statistical conclusions are just that – statistical. They may not always be accurate and should be a basis for informed decision making. Not only can inaccurate data cause data protection concerns, but poor statistical decision making can ruin reputations. There will be plenty more creative thinking for lawyers in 2015 around big data projects.
The pace of change in the financial services sector provides motivation to use these technological developments. With the closure of branches, banks are at risk of losing touch with their customers. We are likely to see big data being used in order for them to know their customers better.
Subscribers to Lexis®PSL IP & IT have speedy access to developments in relation to Big Data and other emerging technologies. Further news and guidance can be found in our exclusive Lexis®PSL IP & IT news and guidance tracker. Material relevant to the rise of Big Data includes:
During 2014 increased consideration was given to the legal implications of emerging areas such as wearable technology and 3D printing. In November, Halsbury’s Law Exchange hosted a panel discussion on the privacy implications and social impact of wearables. Lexis®PSL IP & IT produced a free mini-mag on Wearable Technology (available to non-subscribers) in association with the event containing articles on:
3D printing technology has also progressed significantly in recent years and now allows the manufacture of three dimensional objects at a consumer level. Our experts discussed the intellectual property challenges its widespread adoption presents.
With reference to 3D printing, litigation will come to the fore once files are available on pirate sites. This may go down the same route as for illegal film and music file sharing. However, there are currently problems with 3D printing materials – many items look like they are made of cheap plastic – which will need to be dealt with first.
Subscribers to Lexis®PSL IP & IT have access to a topic area dedicated to technology trends which includes:
Publishing, music and film
2014 was a big year for legislative copyright developments and this occupied the minds of many of our experts engaged with the creative industries. The impact of convergence continues to challenge traditional business models especially in music and film where the rise of on-demand streaming looks likely to continue into 2015.
Over the past year the CDPA 1988 has been amended a number of times, most recently to introduce further “permitted uses” which fall outside of the scope of the infringement provisions. Although the practice of amending the act by shoe-horning new provisions between existing sections has led to an ever more unwieldy and convoluted statute, it is at least possible to identify the newer provisions by the presence of letters as part of the section “numbers”. The new sections of greatest concern to my clients in the publishing and music industries are:
Of these, the section 28B is the most important.
It is getting harder to get films into the cinemas because ‘event cinema’ – eg theatre - is now being filmed and shown in cinemas and is very popular. These cultural events are lucrative for the cinema as they can charge a higher ticket price. There is less money in VoD. Some cinemas are also even doing their own online distribution, eg Curzon.
In relation to copyright developments, WIPIT blog posts in 2014 looked more closely at the parody exception, jurisdiction issues in online copyright infringement and what to expect from copyright in 2015.
Subscribers to Lexis®PSL IP & IT have access to a comprehensive review of how copyright legislation changed in 2014 and there is a dedicated Media & Entertainment topic area with practice notes, precedents and news analysis on industry issues and transactions. Further related material includes:
Standard Essential Patents (SEPs)
For technology to work between different devices, technical standards need to be agreed for use by the different mobile telecoms companies such as handset vendors and network operators. The technology belonging to the respective companies may be covered by a myriad of patents. Working out how to interrelate these exclusive patent rights with technical standards agreed among industry leaders is not always easy, nor is regulating how those who do not own any of the patents get access to this technology and on what financial basis. There is often a potential clash between patent rights and competition law in this area. Technical standards in telecommunications and information technology and SEP-related disputes look set to continue to occupy the courts in 2015.
Companies can present patents to a standard-setting body and make offers to license them on a FRAND (fair, reasonable and non-discriminatory) basis should they be incorporated into the relevant standard. The incorporation of a patent into a standard can potentially confer significant market power on the patent holder, and thus many cases have questioned the anti-competitive nature of subsequent enforcement actions.
Various aspects of SEPs have been questioned across Europe requiring the courts to balance the rights of the SEP holder to exploit its intellectual property rights, and the rights of the potential licensee to conduct business in a free and unhindered manner. In proceedings between Huawei v ZTE, the German court has referred a series of questions to the Court of Justice of the European Union (CJEU). In essence, the court is seeking to understand in what circumstances a SEP holder who seeks an injunction against alleged infringers can be considered to breach the Treaty on the Functioning of the European Union, art 102. What criteria can be applied to decide if the potential licensee is 'willing' to take a licence?
Is the current trend on injunction issues, pro patentee, pro licensee or a middle way? On one side you have the German court's 'Orange Book' case law which is firmly pro patentee. On the other, are cases which were pro licensee, such as the EU Commission's Motorola decision and the Samsung commitments decision.The A-G's opinion in Huawei v ZTE (November 2014) represents a 'middle' way....the CJEU decision is awaited early 2015.
Big questions for 2015: Will the telecoms industry rely more and more on third party rate-setting mechanisms, rather than commercial negotiations? Will we see more court disputes concerning rate-setting issues?
The large technology companies seem to be building ‘defensive IP portfolios’. They may have a strong patent portfolio but not seek to aggressively exploit it. However, if they are sued for patent infringement by competitors (or patent trolls) they can use this portfolio to fight back. As such these patents are more a ‘shield’ than a ‘sword’.
Subscribers to Lexis®PSL IP & IT benefit from in-depth patent coverage including a dedicated topic area on sector-specific patent issues. Material includes:
Issues surrounding access to individuals’ communications were in the spotlight in 2014. In April 2014 the CJEU held that the Data Retention Directive (2006/24/EC) was invalid resulting in the speedy adoption of the Data Retention and Investigatory Powers Act 2014 (DRIPA) in July 2014 – see DRIPA 2014—what are the most noteworthy changes? The Home Office launched a consultation on an updated Acquisition and Disclosure of Communications Data Code of Practice and a new Retention of Communications Data Code of Practice, the latter influenced by provisions of the Counter Terrorism and Security Bill introduced in Parliament in November 2014. Given recent terrorist events, it is likely that these issues will remain high profile in 2015.
In discussing developments in this area, an interesting issue arose regarding encrypted communication devices.
Apple doesn’t currently hold iPhone decryption keys – on Apple mobile devices under IOS 8, the latest encryption prevents anyone but the device owner from gaining access to its user's data. This may mean having to obtain a warrant that will force the user to decrypt. However, will we see a change in policy that tech companies will have to hold decryption keys?
Subscribers to Lexis®PSL IP & IT can track developments on accessing communications data in its Lexis®PSL IP & IT legislation tracker. Material covering DRIPA 2014, Communications data codes of practice, the application of RIPA 2000 and related issues includes:
The IoT may be defined as 'the synthesis of various technologies that allow real-world things (known as objects) to interact with each other and/or their environment’. 2014 saw increasing scrutiny of the implications of such connectivity on initiatives such as the Smart Grid – see Towards A Smarter Electricity Grid?
The explosion in the use of internet connected objects is likely to draw more attention from regulators in 2015.
British ministers are starting to become excited about the IoT - wearables, fridges, sensors, cars that can communicate machine to machine and make our life better. The technologies are reducing in price and beginning to see market uptake. The policy dialogue about the impact on privacy, security and surveillance is lagging far behind, raising the prospect of greater pervasive monitoring of citizens. Meanwhile, the UK has been slow to adopt new protocols that would give us the internet address space we need for the IoT.
Subscibers to Lexis®PSL IP & IT can monitor regulatory developments such as the recent Article 29 Data Protection Working Party Opinion on IoT via the IP & IT news and guidance tracker. Further material dealing with issues associated with the IoT, its application and its implications includes:
Retail, E-commerce and brands
While there were notable casualties on the high street in 2014, it seems that reports of its death have been exaggerated. In part this appears due to the marrying of online ordering to physical collection and a growing focus on shopping as an experience facilitated and enhanced through the use of internet based technology. The significance of brand in the emergence of this new model remains undiluted although the jury remains out as to whom the expansion in domain names seen in 2014 has benefitted.
The 2014 collapse of Phones4U might be seen as symbolic of the high street. Fighting slim margins and internet sales, can high rental and staffing costs for local stores be justified? The answer from the retail community seems to be a resounding "yes". It's not a case of they-would-say-that-wouldn't they. Primarily this is because internet real estate does not always get the connection with customers that the high street does. There is strong evidence that people want to at least collect high value items and personal items in store. By the end of last year around 20% of retail sales were click and collect and this is growing rapidly. The idea of buying on line and collecting in store is, it turns out, a very human one. This year, eBay and Argos extended their close relationship to extend collection of eBay purchases to 650 Argos stores. I was delighted to help in the process. Harnessing the power of the on-line channel into people's homes and marrying that to the personal touch and security of collection in store is certainly one of the many strands of the future of retail. "Clicks and mortar" will grow apace in 2015.
In the fashion and luxury goods sector we are moving back to customer’s wanting a ‘real world’ space – visiting flagship stores for a richer experience, including as a ‘hub’ for price comparison. The flagship store becomes part of a strategy to build a brand which can be exploited online. The changes to distance selling regulations are also making it easier to return goods.
Charities face grants cuts by the Government and therefore are needing to be self-sufficient, so there is a move to commercial activities such as food, shops and restaurants.
New generic top-level domain names (gTLDs) came on the market in 2014. Uptake has been lower than expected. Only 4 million domains have been registered across 400 new gTLDs, and nearly 70% of those names are not in active use. The raft of new rights protection mechanisms have been little used. There have only been 200 URS cases, and no sunrise disputes at all. As we move through 2015, we will start to see the impact of renewals hitting the new gTLDs, and may start to see the first business failures. Meanwhile, the ICANN community is working to open the next round of applications. Apart from netting ICANN over $350 million in application fees, the benefits to consumers of the new gTLD program are hard to see.
WIPIT blog posts in 2014 explored many of the issues facing retailers and brand owners in, for example:
Subscribers to Lexis®PSL IP & IT have access to dedicated topic areas on e-commerce and websites. There is extensive brand-related material under trade marks and passing-off topic areas and a thorough analysis of domain name issues and their associated dispute resolution processes. Material pertinent to retail, e-commerce and brand issues includes:
A recent report published by the department for culture, media and sport notes how significantly the creative industries (encompassing advertising, design, IT — including software and computer services — publishing, museums, galleries, libraries, music and the performing and visual arts, as well as film, TV and radio) boost the UK economy. Those advising in these areas face one of the fastest developing areas in legal practice. Lexis®PSL IP & IT provides practical know-how including practice notes, precedents and news analysis to ensure practitioners stay on top of new developments and work more efficiently. We thank the members of our consulting editorial board and other special guests for a stimulating discussion, their expert insights into 2014 and the year ahead.
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