A Day In The Life Of A Paralegal

A Day In The Life Of A Paralegal At EM Law

Recording a single day in the life of a paralegal would be misleading. I often spend a whole day performing one task. So it wouldn’t give you much scope to focus on such a short time period. Rather I will describe an assemblage of many days. Given the current circumstances – working from home and away from the office – I have spent a lot of time doing this – writing blogs. I will cast my mind back to early March last year. When we were last in the office. I had been travelling to and from Shoreditch for a grand total of nine weeks. Neil and I would be bouncing ideas off one another and I felt I was learning a lot fast. Then, before I knew it, Neil become a disembodied voice on the phone or a floating head on my laptop. As the firm seemed to get busier and busier I found myself cut off from everyday discussions and updates. On the upside I had more time to think and Neil had time to send me challenging tasks with longer deadlines. Anyway, before describing the kind of work I do here is a semi-fictional account of a day in the Shoreditch office…

Day in the life of a paralegal

It’s January or February or March, it doesn’t matter because it’s cold. I step out of the crowd at Shoreditch High Street Station to cross the road and walk quickly through the few lively streets towards Old Street. I pass the Old Blue Last where I saw a gig a few weeks ago and a Japanese restaurant where Neil and I enjoyed Ramen once. And then through the revolving doors and into the atrium of the White Collar Factory. An impressive industrial modernist space with the utilities exposed on the ceiling and a chunky singular concrete column imposing and cylindrical.

I walk up the stairs and, after passing through many doors, enter our small office. Neil is either there, having arrived 3 or 4 hours earlier if he is particularly busy, or he may be yet to arrive if he has time to take his children to school. Often there is work to do on arrival – reviewing a contract drafted the day before which is to be sent to a client later that day or finishing a bit of research to present to Neil that morning. The day is then spent reading, researching, drafting, discussing, overhearing conversations with clients and dealing with new enquiries.

Research

A lot of time is spent researching specific points of law which I then present to Neil to help him take a view on how to move forward with a client. Examples include – cookie law, competition law for exclusive distribution agreements, incorporation of terms by reference into contracts, anti-money laundering legislation, bribery act, anonymising personal data etc. As you can see it’s a real mixed bag. I never know what the next bit of research will bring but the thing I probably spend the most time looking into is data protection. Given that the firm works for plenty of tech start-ups, data laws are often an area to be explored.

Reviewing

Reviewing contracts is a question of patiently sitting down and reading the document slowly and methodically. I tend to switch off completely from the outside world. The contracts can vary from software distribution agreements to drone tenders for governments in developing countries. Having a good eye for grammar and the logic needed to bind a contract together is important. I still feel like a novice but every time I review one of these documents I can tell I am improving. Which is satisfying.

Drafting

Drafting can seem daunting to someone at my stage. I have drafted supply of goods contracts, SaaS contracts, introducer agreements and a letter to be sent to Counsel for an opinion on a bit of litigation. I have made many mistakes and getting feedback from Neil has been crucial for my development. I have enjoyed the challenge and it is an opportunity to be creative given that you have to come up with the most elegant, simple and effective solution for a client. Which will always be unique to the situation at hand. Being adaptable and mindful of the client’s needs is therefore crucial.

Blogging

Less time spent in the office has meant more time for me to write blogs for the website and help with marketing. Writing blogs can be a fun exercise. It is similar to writing a short university essay, although your opinion is less important. At the same time it is important to write on the topics that clients will find useful and in language that is clear and relatable. This means one week I am writing about space law but the next about specific software agreements or the need for a representative under GDPR. Being engaging whilst helpful has been my aim.

New enquiries

I often speak to new clients over the phone and this is something in which my confidence has grown tremendously since working with EM law. You begin to get a sense of the kind of things clients are having issues with and you grow confidence in your own voice and ability to understand the issues at hand. My personal contact with clients themselves has been limited so this has been a good way of learning how to communicate in law.

Final observations

Reading. The more reading I do the better job I do on all accounts. Not giving up when you think you have looked everywhere for a piece of information is also important as you often find that just when you think all hope is lost, if you keep going, you find the bit of information you need in the next few clicks. Working as a paralegal at EM law is particularly exciting because of the close contact between myself and Neil which means I learn a lot about law, but it also gives it the feel of a start-up and each marketing decision is a new adventure.

Hopefully this gives you a rough idea of a day in the life of a paralegal. If you are thinking of a career in law I can definitely recommend it!


Draft Adequacy Decisions

Draft Adequacy Decisions: Data Flows EU to UK

Draft adequacy decisions were published on 19 February 2021 by the European Commission (EC) for personal data transfers from the EU to the UK. The significance of the drafts are considerable given they are the first to be produced since the European Court of Justice’s (ECJ) ruling in Schrems II which struck down the adequacy decision previously granted to the EU-US Privacy shield.

The EC’s press release on the draft adequacy decisions stated that it has carefully assessed the UK’s law and practice on personal data protection, including the rules on public authorities access to personal data, and concluded that the UK ensures an ‘essentially equivalent’ level of protection to that guaranteed under the EU GDPR and Law Enforcement Directive.

What does adequacy mean?

‘Adequacy’ is a term that the EU uses to describe other countries, territories, sectors or international organisations that it deems to provide an ‘essentially equivalent’ level of data protection to that which exists within the EU. An adequacy decision is a formal decision made by the EU which recognises that another country, territory, sector or international organisation provides an equivalent level of protection for personal data as the EU does. The UK is seeking adequacy decisions under both the General Data Protection Regulation (GDPR) and the Law Enforcement Directive (LED).

The effect of an adequacy decision is that personal data can be sent from an EEA state to a third country without any further safeguard being necessary. The trade deal agreed between the UK and the EU means that the UK has a bridge until 30 June 2021 where data can continue to flow from the European Economic Area (EEA) to the UK whilst the adequacy decisions process takes place. The bridge can finish sooner than this if the EU adopts adequacy decisions in respect of the UK.

Transfers of data from the UK to the EEA are permitted. The UK Government has recognised EU Commission adequacy decisions made before the end of the transition period. This allows restricted transfers to continue to be made from the UK to most organisations, countries, territories or sectors covered by an EU adequacy decision.

Adequacy criteria

In order to draw conclusions on the UK’s data protection regime, the EC assessed a number of factors when producing the draft adequacy decisions:

  • UK constitution – especially in relation to the UK’s adoption of the rights in the European Convention on Human Rights in its UK Human Rights Act 1998.
  • UK data protection laws – particularly how the UK has adopted EU data laws following Brexit through the implementation of the UK GDPR and maintenance of the DPA 2018. This includes the incorporation of both the territorial and material scope of EU data law as well as definitions, principles and rights afforded to individuals. The main point being that they are all equivalent to those in the EU GDPR.
  • Restrictions on transfers outside of the UK – how, via the implementation of the UK GDPR, the rules on international transfers of data are as restrictive as under the EU GDPR, and how data subjects in the EU can therefore have confidence that onwards transfers of data will be effectively restrained.
  • Enforcement – the Information Commissioner’s Office (ICO) is the “independent supervisory authority tasked with powers to monitor and enforce compliance with the data protection rules” and is equivalent to the various data protection authorities to be found throughout the member states of the European Union. The EC considered the number of cases investigated and fines imposed by the ICO, as a method by which to deduce its legitimacy.
  • Redress – here the EC highlighted the ability of data subjects to make complaints with the ICO, prosecute for damages under the UK GDPR and utilise the Human Rights Act 1998 to express their data rights, with the European Court of Human Rights as an ultimate source of authority.

Consequences of adoption

If adopted, the draft adequacy decisions will be valid for an initial term of four years, only renewable if the level of protection in the UK continues to be adequate. The drafts include strict mechanisms for monitoring and review, suspension or withdrawal, to address any problematic development of the UK system which will no longer be bound by EU privacy rules.

UK government response to the draft adequacy decisions

The UK government has welcomed the draft adequacy decisions, urging the EU to fulfil its commitment to complete the approval process swiftly. The Information Commissioner described the progress as "an important milestone in securing the continued frictionless data transfers from the EU to the UK".

The draft adequacy decisions are now with the EDPB for a "non-binding opinion", following which the EC will request approval from EU member states' representatives. It could then adopt final adequacy decisions. Until then, organisations continue to be able to receive personal data from the EU under the temporary "bridging mechanism", agreed in the EU-UK Trade and Cooperation Agreement.

Schrems II

The draft adequacy decisions also include a detailed assessment of the conditions and limitations, as well as the oversight mechanisms and remedies applicable in case of access to data by UK public authorities, in particular for law enforcement and national security purposes. These are likely included to address the ECJ's ruling in Schrems II and concerns over the UK's use of mass surveillance techniques.

In Schrems II, the ECJ ruled that free data flows moving from the EU to certain US organisations under the EU-US privacy shield did not offer an essentially equivalent level of protection as under EU law. This was substantially based on the fact that national security laws in the US were deemed to undermine citizens’ data rights. When assessing the UK, the ECJ, in light of the ruling in Schrems II, was always going to pay close attention to UK national security laws. Additionally, Schrems II introduced more stringent obligations on organisations when carrying out cross border data transfers and so there has been a general concern that this newly stringent approach may reduce the UK’s chance of receiving an adequacy decision. The drafts can therefore be seen as a highly positive step.

What stands in the UK’s way?

Although the process for an adequacy decision under the EU GDPR is now underway with the draft adequacy decisions in place and, although the UK government has stated on a number of occasions that it is confident that the EU will deem the UK data protection regime ‘essentially equivalent’, it is worth noting that a number of issues may impact on the UK's ability to satisfy the EU:

  • The UK's use of mass surveillance techniques may lead to EU member states raising concerns about data protection in the UK, which might jeopardise an Adequacy Decision. The ruling of the ECtHR which held that aspects of the UK's surveillance regimes under the Regulation of Investigatory Powers Act 2000 (RIPA) did not comply with Articles 8 and 10 of the ECHR, is particularly relevant (Big Brother Watch and others v United Kingdom). The human rights groups which brought the claim were not satisfied with the judgment and appealed to the Grand Chamber, the ECtHR's highest judicial bench.
  • Membership of the Five Eyes intelligence sharing community means EU citizens' data could be transferred by UK security services to third countries (including the US) which are not considered to have adequate data protection.
  • Potential for unprotected onward data transfers as the UK will be able to decide which countries it deems adequate and what arrangements to have with them.

The draft adequacy decisions - a positive step

Although nothing can be taken for granted, the draft adequacy decisions are a positive step and the fact that the UK has committed to remaining party to the ECHR and "Convention 108", will likely carry some leverage as adherence to such international conventions is important for the stability and durability of adequacy findings.

If you have any questions on the draft adequacy decisions, data protection law more generally or on any of the issues raised in this article please get in touch with one of our data protection lawyers.


E-privacy

E-Privacy – PECR and Brexit

E-Privacy regulations complement data protection laws by setting out privacy rights for electronic communications. The idea being that whilst widespread public access to digital mobile networks and the internet has opened up new possibilities for businesses and users, they have also created new risks for privacy. E-Privacy regulations have been a point of contention within the EU and reform has been expected for some time. On 10 February 2021, 4 years after the European Commission’s initial legislative proposal and to the surprise of many, the European Council reached a compromise agreement on their position on the E-privacy Regulation. What this means for E-privacy rules in the UK remains to be seen. With Brexit behind us, and therefore no obligation to introduce new EU legislation in the UK, but with an adequacy decision pending, and therefore a desire for the UK to align with the EU on data protection, it is hard to say whether or not the UK will choose to implement them. For more information on data protection and a potential adequacy decision after Brexit read our blog.

E-Privacy and PECR

PECR are the Privacy and Electronic Communications Regulations which comprise the E-privacy regulations in the UK. Their full title is The Privacy and Electronic Communications (EC Directive) Regulations 2003. They are derived from European law. PECR have been amended a number of times. The more recent changes were made in 2018, to ban cold-calling of claims management services and to introduce director liability for serious breaches of the marketing rules; and in 2019 to ban cold-calling of pensions schemes in certain circumstances and to incorporate the GDPR definition of consent.

What kind of areas do PECR cover?

PECR cover several areas:

  • Marketing by electronic means, including marketing calls, texts, emails and faxes.
  • The use of cookies or similar technologies that track information about people accessing a website or other electronic service.
  • Security of public electronic communications services.
  • Privacy of customers using communications networks or services as regards traffic and location data, itemised billing, line identification services (eg caller ID and call return), and directory listings.

How does this fit with the UK GDPR?

The UK GDPR sits alongside PECR. PECR rules apply and use the UK GDPR standard of consent (which is a high threshold). This means that if you send electronic marketing or use cookies or similar technologies you must comply with both PECR and the UK GDPR. Unsurprisingly, there is some overlap, given that both aim to protect people’s privacy. Complying with PECR will help you comply with the UK GDPR, and vice versa – but there are some differences. In particular, it’s important to realise that PECR apply even if you are not processing personal data. For example, many of the rules protect companies as well as individuals, and the marketing rules apply even if you cannot identify the person you are contacting.

If you are a network or service provider, Article 95 of the UK GDPR says the UK GDPR does not apply where there are already specific PECR rules. This is to avoid duplication, and means that if you are a network or service provider, you only need to comply with PECR rules (and not the UK GDPR) on:

  • security and security breaches;
  • traffic data;
  • location data;
  • itemised billing; and
  • line identification services.

Electronic and telephone marketing

PECR restrict unsolicited marketing by phone, fax, email, text, or other electronic message. There are different rules for different types of communication. The rules are generally stricter for marketing to individuals than for marketing to companies. Companies will often need specific consent to send unsolicited direct marketing. The best way to obtain valid consent is to ask customers to tick opt-in boxes confirming they are happy to receive marketing calls, texts or emails from you.

E-Privacy: Cookies and similar technologies

Companies must tell people if they set cookies, and clearly explain what the cookies do and why. You must also get the user’s consent. Consent must be actively and clearly given. There is an exception for cookies that are essential to provide an online service at someone’s request (e.g. to remember what’s in their online basket, or to ensure security in online banking). The same rules also apply if you use any other type of technology to store or gain access to information on someone’s device.

Communications networks and services

PECR are not just concerned with marketing by electronic means. They also contain provisions that concern the security of public electronic communications services and the privacy of customers using communications networks or services. Some of these provisions only apply to service providers (e.g. the security provisions) but others apply more widely. For example, the directories provision applies to any organisation wanting to compile a telephone, fax or email directory.

EU Council position on E-Privacy rules

On 10 February 2021, EU member states agreed on a negotiating mandate for revised rules on the protection of privacy and confidentiality in the use of electronic communications services. These updated E-privacy rules will define cases in which service providers are allowed to process electronic communications data or have access to data stored on end-users’ devices. The agreement allows the Portuguese presidency to start talks with the European Parliament on the final text. The agreement included:

  • The regulation will cover electronic communications content transmitted using publicly available services and networks, and metadata related to the communication. Metadata includes, for example, information on location and the time and recipient of communication. It is considered potentially as sensitive as the content itself.
  • As a main rule, electronic communications data will be confidential. Any interference, including listening to, monitoring and processing of data by anyone other than the end-user will be prohibited, except when permitted by the E-privacy regulation.
  • Permitted processing of electronic communications data without the consent of the user includes, for example, ensuring the integrity of communications services, checking for the presence of malware or viruses, or cases where the service provider is bound by EU or member states’ law for the prosecution of criminal offences or prevention of threats to public security.
  • Metadata may be processed for instance for billing, or for detecting or stopping fraudulent use. With the user’s consent, service providers could, for example, use metadata to display traffic movements to help public authorities and transport operators to develop new infrastructure where it is most needed. Metadata may also be processed to protect users’ vital interests, including for monitoring epidemics and their spread or in humanitarian emergencies, in particular natural and man-made disasters.
  • In certain cases, providers of electronic communications networks and services may process metadata for a purpose other than that for which it was collected, even when this is not based on the user’s consent or certain provisions on legislative measures under EU or member state law. This  processing for another purpose must be compatible with the initial purpose, and strong specific safeguards apply to it.
  • As the user’s terminal equipment, including both hardware and software, may store highly personal information, such as photos and contact lists, the use of processing and storage capabilities and the collection of information from the device will only be allowed with the user’s consent or for other specific transparent purposes laid down in the regulation.
  • The end-user should have a genuine choice on whether to accept cookies or similar identifiers. Making access to a website dependent on consent to the use of cookies for additional purposes as an alternative to a paywall will be allowed if the user is able to choose between that offer and an equivalent offer by the same provider that does not involve consenting to cookies.
  • To avoid cookie consent fatigue, an end-user will be able to give consent to the use of certain types of cookies by whitelisting one or several providers in their browser settings. Software providers will be encouraged to make it easy for users to set up and amend whitelists on their browsers and withdraw consent at any moment.

Brexit

PECR continues to apply after the UK's exit from the EU on 31 January 2020. The draft ePR, described in detail above, which is still in the process of being agreed, was not finalised before 31 January 2020 and will therefore not become directly applicable in the UK. Once it is directly applicable to EU member states (which is likely 24 months after its coming into force), the UK will then need to consider to what extent to mirror the new rules. In any case, given that UK companies will continue to process data of EU end users, it will still be necessary to be aware of any discrepancies created by E-privacy reform in the EU.

The deadlock is over

It has long been considered that EU E-privacy regulations have lagged behind the technological progress seen in online marketing techniques and EU negotiations around reform have at times seemed never-ending. The agreement reached by the EU council will therefore be seen as a necessary improvement in legal certainty, although plenty of questions still abound.

PECR in its pre-reformed state will continue to apply in the UK. On 19th February 2021, the European Commission issued its draft adequacy decision that would allow EU-to-UK data transfers. While the E-privacy Regulation is not strictly relevant to the UK’s continued adequacy status, alignment on E-privacy rules would likely be viewed positively by the EU institutions, which could prompt the UK to update its laws in line with the new EU regime. The reforms will of course also be relevant to any UK business that operates in the EU. Even if the Regulation is finally adopted this year, it will not apply for a further two years meaning, these changes will likely not come into effect until 2023 at the earliest.

If you have any questions on E-privacy and data protection, data protection law more generally or on any of the issues raised in this article please get in touch with one of our data protection lawyers.


Space Law

Space Law: The Commercial Space Race Begins

Space law is the body of law governing space-related activities, encompassing both international and domestic agreements, rules, and principles. Parameters of space law include space exploration, liability for damage, weapons use, rescue efforts, environmental preservation, information sharing, new technologies and ethics. SpaceX, in May 2020, became the first private company to send humans to space. What this implies is hard to say. A recent article in the Harvard Business Review sees the sky, or should I say heavens, as the limit. With a healthy interplay between public and private investment, international co-operation and a rule of law suited to this harsh environment, it suggested that NASA’s prediction, in their 1977 report ‘Long-Term Prospects For Developments In Space’, that extra-terrestrial economies could one day out-strip terrestrial ones, was not so far-fetched. The Artemis Accords, signed in 2020 by the directors of 10 national space agencies, also indicates a shift in space law that better accommodate commerce.

Space-for-space economy

An important distinction made in the Harvard Business Review article was between a space-for-earth economy and a space-for-space one. The space-for-earth economy uses space to deliver benefits to those on earth. The use of satellites for telecommunications, internet infrastructure, or earth observation capabilities and national security. The real shift will be when companies are able to offer services in space for use in space – the space-for-space economy. However, creating such a market will require the existence of consumers beyond the stratosphere. Which may not exist for some time. In the meantime private companies will have to rely on public contracts. Hopefully, being able to supply to government space agencies will enable and invigorate supply to future commercial markets. Here are some examples of work being done:

  • SpaceX hopes to support transportation for large numbers of private space travellers. Currently their space-for-space transport solutions have been for government bodies (NASA) only. But with future decreases in the cost of launching spacecraft, SpaceX could be instrumental in putting people into space and creating the demand necessary for a space-for-space economy to develop.
  • Made In Space, Inc. is currently exploring high-quality fibre-optic cable, manufactured in zero-gravity for sale on earth. The company also recently received a $74 million contractto 3D-print large metal beams in space for use on NASA spacecraft. Such construction capabilities will be essential in a developing space-for-space economy.
  • In February 2020, Maxar Technologies was awarded a $142 million contractfrom NASA to develop a robotic construction tool that would be assembled in space for use on low-Earth orbit spacecraft. Such tools will be just as useful for a future private sector.
  • In 2015 Argotec and Lavazza collaborated to build an espresso machine that could function in the zero-gravity environment of the International Space Station. Such luxuries will be crucial for the development of an economy in space, even if for the moment they are mostly publicity stunts.
  • In 2010, Planetary Resources, Inc.and Deep Space Industries, were set up with space mining as their objection (lunar mining). Both failed because the lack of a space-for-space economy made the cost of extracting minerals to be brought back and sold on earth too high to be viable. The natural resources known to exist on the moon will, if a space-for-space economy develops, become big business.

Space law

In what legal system is this commercial activity taking place? Space law is by its nature extra-terrestrial and extra-territorial. Accordingly, its usage is governed by an extensive international legal framework, under the aegis of the United Nations (UN), made up of treaties, agreements and conventions governed by international law, which may be implemented into national law. The Artemis Accords have reinforced many of these frameworks and laid the groundwork for more commercially orientated space law.

The Artemis Accords

The Artemis Accords are named after the NASA project which aims to send the first woman and another man to space by 2024. They are an international agreement for cooperation in the civil exploration and use of the Moon, Mars, comets, and asteroids for peaceful purposes, and are grounded in what is often considered the foundation of space law, the Outer Space Treaty of 1967. The stated purpose of the Artemis Accords is to "provide for operational implementation of important obligations contained in the Outer Space Treaty and other instruments." The provisions:

  • Affirm that cooperative activities under these Accords should be exclusively for peaceful purposes and in accordance with relevant international space law.
  • Confirm a commitment to transparency and to share scientific information, consistent with Article XI of the Outer Space Treaty.
  • Call for a commitment to use reasonable efforts to utilize current interoperability standards for space-based infrastructure, and to establish standards when they do not exist or are inadequate.
  • Call for a commitment to take all reasonable efforts to render necessary assistance to personnel in outer space who are in distress.
  • Specify responsibility for the registration of objects in space.
  • Call for a commitment to publicly share information on their activities and to the open sharing of scientific data.
  • Include an agreement to preserve outer space heritage, which they consider to comprise historically significant human or robotic landing sites, artifacts, spacecraft, and other evidence of activity, and to contribute to multinational efforts to develop practices and rules to do so.
  • Include an agreement that extraction and utilization of space resources should be conducted in a manner that complies with the Outer Space Treaty and in support of safe and sustainable activities. The signatories affirm that this does not inherently constitute national appropriation, which is prohibited by the Outer Space Treaty. They also express an intent to contribute to multilateral efforts to further develop international practices and rules on this subject.
  • The Accords provide for the announcement of "safety zones", where operations of other nations or an anomalous event could reasonably cause harmful interference.
  • Include a commitment to mitigate space debris and to limit the generation of new, harmful space debris in the normal operations, break-up in operational or post-mission phases, and accidents.

National framework – UK

The UK has some of its own space law. The UK Outer Space Act 1986 sets out the UK's obligations under the various international treaties and principles covering the use of outer space. This Act also covers entities in certain of the UK's overseas territories and the Channel Islands, as well as the Isle of Man, and requires all those seeking to launch or procure the launch of a space object, operate a space object or undertake any activity in outer space, to obtain a licence. Licensing and other powers are conferred on the Secretary of State for the Department of Business, Energy and Industrial Strategy (BEIS), who carries out these powers through the UK Space Agency (UKSA). The UKSA was launched in April 2010, bringing all UK civil space activities under one single management. The UKSA began operation as a full executive agency on 1 April 2011.

The Space Industry Act 2018 is space law intended to make provision for space activities including vertical launches and suborbital activities in the UK. The UK government intends that licences under it, including for launch and sub-orbital activities, will be granted by 2021. Secondary legislation will be enacted to cover specific aspects of the Act, including licensing and insurance requirements.

Liability

The status and liability of commercial use of outer space, including the moon and other celestial bodies, is not very clear under the existing space law regimes. According to Article VI of the Outer Space Treaty 1967 and Articles II and III of Liability Convention 1972, the country in which the launch of the spacecraft takes place is liable for any activities in outer space. Even in the case of non-governmental activities, the launching state is liable. The possible litigation relating to the commercial activities are mainly the financial consequence of damage caused and also the technical complications that private entities face in case of supply of defaulted parts to national space agencies.

Legal status of resource exploitation

No nation claims ownership of any part of the Moon's surface, and the international legal status of mining space resources is unclear and controversial.

Russia, China, and the United States are party to the 1967 Outer Space Treaty (OST), which is the most widely adopted treaty, with 104 parties. The OST treaty offers imprecise guidelines to newer space activities such as lunar and asteroid mining, and it therefore remains under contention whether the extraction of resources falls within the prohibitive language of appropriation in the treaty. Although its applicability on exploiting natural resources remains in contention, leading experts generally agree with the position issued in 2015 by the International Institute of Space Law (ISSL) stating that, “in view of the absence of a clear prohibition of the taking of resources in the Outer Space Treaty, one can conclude that the use of space resources is permitted”.

Seeking clearer regulatory guidelines, private companies in the US prompted the US government, and legalized space mining in 2015 by introducing the US Commercial Space Launch Competitiveness Act of 2015. Similar national legislations legalizing extra-terrestrial appropriation of resources are now being replicated by other nations, including Luxembourg, Japan, China, India and Russia. This has created an international legal controversy on mining rights for profit. James R. Wilson, a legal expert stated in 2011 that the international issues "would probably be settled during the normal course of space exploration." In April 2020, U.S. President Donald Trump signed an executive order to support moon mining.

The final frontier

With the huge commercial potential that space offers comes the huge mobilisation required for its realisation. More than a little bit of luck will be needed to see dreams realised in the near future. Three things are certain: the private sphere will need invigoration by both government contracts/investment and their willingness to deregulate, such as allowing private space travellers to take on more safety risks than government funded ones; a vigorous upholding of the rule of law will create a bedrock for competitiveness; and a transcendence of geopolitical divides will ensure safe and unimpeded economic development.

Whilst the Artemis Accords have introduced some co-operation between nations on the question of how to regulate activity in space, it lacked two signatories: China and Russia; and failed to clarify whether, under space law, resource extraction could constitute national appropriation of areas in space.

EM law specialises in technology law. Get in touch if you have any questions on the above.


Robot Manufacturing

Robot Manufacturing: Product Liability Law

Robot manufacturing is a growth industry as the costs of producing robots are going down while the savings in labour costs are rising. With the rise and rise of automation in all areas of life, the word robot has come to mean a wider variety of things. Artificial intelligence (read our blog on some legal issues) has received the most amount of attention recently especially given its crossover with big data (read our blog). But what about the more conventional notion of a robot – the walking, talking lump of steel, more willing to do jobs we’re not so keen on. The sort that product liability law applies to more obviously. This blog covers some issues that a robot manufacturer may encounter when putting such a product on the market.

Robot Manufacturing - product liability and safety risk management

Product liability lies in the accountability faced by a manufacturer of a sub-standard, defective or dangerous product. Such accountability applies to the members of the public who purchase such a product and those below a manufacturer in the supply chain. Contractual protections, insurance and effective risk management can be used to protect a manufacturer from such liability.

Can liability for a dangerous or defective product be excluded or limited?

Contractual protections create a variety of scenarios. Whilst a manufacturer may wish to limit its own liability to parties beneath it in the supply chain, they may well wish to enhance the liabilities of a manufacturer above it. The terms of a contract are the vehicle by which this can be achieved. Additionally a robot manufacturer will want to be certain that quality and safety standards are judiciously applied to every level of its supply chain, especially key suppliers. Given the potential technological complexity of such an industry, it may even be useful to seek the advice of specialist consultants who have the know-how to ensure all the liability that should be attributed to suppliers is and that a comprehensive set of standards is agreed to in the contract.

There are various ways that robot manufacturing companies can do this. Limiting and excluding liabilities within their contracts can be one way – but this is only possible for certain things. There are restrictions on limiting liability for dangerous or defective products. Restrictions that overrule contractual clauses. Robot manufacturers should therefore look to other means, i.e. non-contractual, to control their risk.

Different considerations need to be taken into account when dealing with the various parties within the supply chain. For example, manufacturers, distributors, importers and retailers will all have concerns specific to the role that they undertake.

Is there an effective quality and safety assurance programme in place?

Effective quality assurance is at the heart of non-contractual risk aversion for product manufacturers. This is particularly important in the robot manufacturing industry given that the products usually involve a lot of automation and therefore the blame for something going wrong is more likely to fall on the manufacturers’ shoulders, rather than the customers. Setting up an internal committee to oversee product safety is useful first step. The team should incorporate members from all over the business to ensure nothing is missed. The committee's function should be: to review products and their associated documents; ensure that all appropriate regulatory and internal procedures have been followed and documented before and after marketing; authorise any necessary action (for example, changing warnings or design); review after-sales monitoring reports for trends and significant incidents; review insurance arrangements.

Additionally, keeping good records of exactly what was supplied when and by whom can simplify such a committee’s job.

Is there an effective enquiries and complaints system in place?

A robot manufacturing company must be able to respond to any complaints or enquiries with regard to a product’s safety. This is a legal requirement as well as being based on a desire to look out for your customers and improve your product. Things to think about: does the company have a system to handle customer enquiries and complaints? If so, could it be improved? Are staff adequately trained? Does the company have a policy of recovering allegedly unsafe items and investigating and recording the items and circumstances? Is there a systematic review of adverse incident information involving multi-disciplinary input from different departments? Can the company identify repeat claimants who may not be genuine?

The Services Directive (2006/123/EC), before Brexit, created an obligation to inform customers of how to make complaints and how manufacturers should deal with such complaints. The Services Directive is implemented in the UK by the Provision of Services Regulations 2009 (SI 2009/2999) (PSRs). The PSRs apply to most product manufacturers in the UK and introduce obligations around how to respond to enquiries or complaints about their products.

After Brexit, the Provision of Services (Amendment etc.) (EU Exit) Regulations (SI 2018/1329) implemented this EU law into UK law. All of the obligations around how to deal with enquiries or complaints essentially remain the same. Although some changes were made to EEA-specific provisions. This included the revocation of a requirement not to discriminate against customers based on their place of residence. This means that manufacturers in the UK could treat customers in the EEA differently to customers in the UK now that we have left the EU. The practical implications of this change are yet to be seen.

Robot Manufacturing - Data protection and privacy

The use of robots (drones being a good example) fitted with cameras or other sensors which can collect personal data such as images of people or vehicle plate numbers, geolocation data or electromagnetic signals relating to an individual's device (for example, mobile phones, tablets, Wi-Fi routers, and so on) can have privacy implications.

At EU level, there is no data protection legislation specific to the use of robots/drones; the applicable legal framework is contained in the General Data Protection Regulation (EU) 2016/679 (GDPR). In the UK, the processing of personal data via robot/drones is subject to the GDPR and the Data Protection Act 2018 (DPA) and the legal provisions applicable to CCTV systems. After Brexit, the GDPR will be retained in UK law and amended to become the UK GDPR. For more information on data protection after Brexit read our blog.

The GDPR and the DPA set out the conditions under which personal data can be processed and provide for certain exemptions and derogations, the most relevant being:

  • Household exemption: This applies to the processing of personal data in the course of a purely personal or household activity. This exemption could potentially apply to individuals using robots/drones for their own purposes. However, the ECJ has narrowly interpreted this exemption in the context of the use of CCTV camera. As a result, its application will depend on the specific circumstances of each case. The Information Commissioner's Office (ICO), the UK data protection regulator in charge of enforcing GDPR and DPA requirements, has issued guidance in relation to the use of drones. The ICO makes a distinction between the use of drones by "hobbyists" and their use for professional or commercial purposes. Although "hobbyists" would be likely to be exempted from the GDPR and the DPA on the basis of the household exemption, the ICO has provided tips for the responsible use of drones, inviting people to think of privacy considerations and to apply a common sense approach when recording and sharing images captured by a drone.
  • Journalistic exemption: In cases where personal data is collected through drones with a view to the publication of some journalistic, academic, artistic or literary material. In this case, processing would, under certain conditions, be exempt from many data protection obligations to the extent that such obligations would be incompatible with the purposes of journalism, academic, literary or artistic purposes which are sought by the processing.

Here to help

Robot manufacturing companies come up against many of the same legal issues as other product manufacturing companies. Having risk assessment procedures in place, as well as mechanisms to deal with potential faults, should reduce liability. However, robots are likely to be able to collect data and so data protection law also becomes important.

EM law specialises in technology and contract law. Get in touch if you need advice on Robot Manufacturing or have any questions on the above.


Selling A Software Business

Selling a Software Business - Things to Consider

Software comes in all shapes and sizes, serving a diversity of customers broadened by the internet and strengthened by the onset of generations for whom its application is second nature. Whilst selling a software business will meet unique challenges, there are a number of common threads when considering the legal side. This blog covers a range of topics that, if the seller takes on board, could ensure a buyer’s trust and cooperation when negotiating an agreement.

Selling a Software Business - Intellectual Property Rights

A likely first thing on the mind of a buyer will be to secure all intellectual property rights in the target software. This will mean obtaining an assignment or confirmatory assignment from the owners of such rights. The owners could be employees or consultants. Difficulties arise when dealing with previous employees or consultants who take such rights with them after leaving the developers or business which originally created such software. A seller should therefore do all it can to review intellectual property rights when creating a software it may one day wish to sell. If all else fails, indemnities may be the only way to ensure a buyer is comfortable with the purchase.

Software often uses licenced-in intellectual property rights from third parties. Having a strong understanding of exactly what these are and whether it is possible to grant sub-licences under them should be considered. This will mean reviewing the software’s process of production to ensure that no such rights are missed.

Open source software (OSS) is software code that is usually made available to developers for free and can be licenced in a variety of ways. It would be a incorrect to assume that OSS is licenced in an unrestricted manner at all times, even though in recent years it has generally become less restrictive. BlackDuck is a tool which offers companies the opportunity to search the source code of products for any OSS. Any unclear licences can then be satisfied and again it is likely that a buyer will want indemnities or warranties to ensure that all the OSS has been dealt with. At the very least OSS usually requires an acknowledgement of the original author.

Selling a Software Business - Existing Customers

When selling a software business, a buyer is going to want to assess the revenues of your business, the reliability of such revenue and risks involved with providing services to each customer. Issues likely to arise in customer contracts include:

  • Limits and exclusions of liability.
  • Post-contract services such as maintenance and support obligations.
  • Termination rights - whether through an explicit change of control clause or termination periods, or by unclear drafting in the contract. Much can rest upon whether or not a buyer can rely upon long-term customers to continue to use the software after purchase.
  • Non-compete, exclusivity and similar restrictions. As well as affecting the software’s freedom to operate under such restrictions, they may give rise to competition law issues.

Selling a Software Business - Employee retention

Employees can in some cases be as valuable as the software itself, especially if the buyer is looking to develop the software. Employees often have a breadth of knowledge and experience with a piece of software that is difficult to put onto paper. If key employees are lost then as much information as possible should be put down in the software documentation. Employee retention or at least a point of contact with former employees of a software business may well be the pre-requisite of such an acquisition.

Selling a Software Business - Technology Infrastructure

The issue of technological infrastructure is changing. Before the existence of such readily available online platforms with which companies can access and build their own software, technological infrastructure was, for the most part, hardware. This meant that infrastructure was often difficult to integrate into a buyer’s system.

A seller needs to consider whether the technological infrastructure is shared with anyone (say a subsidiary or other company in the seller’s group), whether they plan to integrate the software into the buyer’s technological infrastructure and whether the software is in any way being provided by a third party:

  • Infrastructure shared with other members of the seller’s group – a number of solutions exist to this issue, the most common being licensing or transitional services arrangement within the group that is often limited in time and to particular services.
  • Integration in to buyer’s infrastructure – as well as technical issues of integration and compatibility, if the infrastructure is duplicated, the target should undertake an assessment of whether these duplications can be eliminated and if the seller can terminate relevant supplier contracts.
  • Third parties – it used to be the case that companies using software would share a server with other companies and such hardware would have to be maintained to reach the requirements of each company. With the trend towards virtualisation of the computing environment, seller’s will often be beholden to a variety of third-party platforms to provide cloud space and hosting capabilities. Sellers should therefore review their position in relation to all such third parties to ensure they have the necessary rights to transfer ownership of any such agreements.

Selling a Software Business - Data protection

Data protection is an increasingly important issue for any software business. In assessing your business, and its IT systems, it is important to understand what personal data is handled, the protections and policies surrounding this, including any instances of breach of these policies, and the applicable laws such as the UK GDPR (for information on how Brexit has affected data protection law read our blog). It is attractive for a buyer to know that the seller takes data protection seriously and has built-in mechanisms to support it.

Developments in software supply have accounted for an increased risk in data protection. Subscription based services which often store customer data on the sellers platform (for instance, if it supplies software under a software as a service (SaaS) model) run into such issues as an obligation is created to secure and lawfully process the personal data being stored by the seller. Software often used to be sold anonymously, and without updates, external content, or other means to identify the user, and the seller was not storing personal data for its customers (because there were usually no logins or other data collections linked to a cloud-based platform). Data protection law is forever morphing in response to the rapidly developing technological landscape and so it could be wise to review your position at multiple points along the timeline of implementing the acquisition of a software business.

Cybersecurity

Cybersecurity is set to become an increasingly important issue for sellers in any software acquisition. On 10 May 2018, the Network and Information Systems Regulations 2018 (SI 2018/506) (NIS Regulations) came into force. They place minimum cybersecurity and incident notification obligations on relevant digital service providers. If the software qualifies as an in-scope digital service provider under the relevant legislation, then it will be important for the seller to understand:

  • What network and information systems it relies upon to provide its services.
  • What measures it takes to manage the risks posed to the security of those systems (including with a view to ensuring continuity of its digital services).
  • What means it has of monitoring and assessing any incidents that have a substantial impact on the provision of its digital service.
  • How it reports such incidents to the Information Commissioner's Office (ICO), the UK regulator in this area, and in what timescales.
  • Failure to abide by the minimum cybersecurity standards and incident notification requirements set out in the NIS Regulations, can attract substantial regulatory fines in the UK of up to £17 million. Relevant digital service providers are also under an obligation to ensure that they have adequate documentation available to enable the ICO to verify compliance with the relevant security obligations, meaning that in practice the ICO may request to see (and buyers will want to diligence) various policies including those relating to system security, incident handling, security monitoring, business continuity management, and compliance with international standards.

Here to help

Selling a software business comes with a range of challenges, whether or not it involves software. Software does, however, introduce some specific issues. The greatest change in recent times has been from software sold for on-premises installation, to software being available to sell via, in most instances, a SaaS platform. This means that, as a software business owner, you are more likely to rely upon third parties to deliver your services. Making sure that your relationship with these third parties is transferrable to a buyer is important. Equally significant is the likelihood of intellectual property rights being scrutinised by a potential buyer. Knowing that you own all aspects of the business you intend to sell will always be high on a buyer’s list of assurances. Software has a uniquely high chance of infringing IPR’s without being aware of it. For more information on this read our blogs Open Source Software and Legal Protection of Software.

EM law specialises in technology and corporate law. Get in touch if you need advice on selling a software business or have any questions on the above.


software as a service

Software as a Service (SaaS) - Some Key Aspects

Software as a Service (SaaS), instead of on-premises software licencing, continues to grow as a model. It is sometimes referred to as ‘on-demand software’, and was formerly referred to as “software plus services” by Microsoft. In a nutshell SaaS is a software licencing and delivery model in which software is licenced on a subscription basis and is centrally hosted by the provider. It exists on the cloud as opposed to being installed on the customer’s on-premises computing system. Read more about cloud computing in our blog.

Software as a Service is a growth area

SaaS has grown its share of the global enterprise software market from less than 2% in 2009 to 23% in 2019. By 2022, the global SaaS market is expected to be worth $140.63 billion. For customers, the service can offer greater access, convenience, and flexibility at a lower cost. And for vendors, it is easier, faster, and less expensive to roll out and sell to customers compared with traditional on-premises software development.

Common characteristics of SaaS arrangements

  • The service software is not installed or stored on the customer's computer systems. The SaaS provider (or its subcontractor) hosts core SaaS software applications. While the customer may receive limited client-side software to aid connectivity to the provider's network, the customer accesses the provider's software remotely on the internet or another public, private, or hybrid public and private cloud network.
  • The SaaS services and infrastructure are managed by or for the SaaS provider and shared by multiple customers. Each SaaS customer accesses the service applications remotely from various client devices, but does not configure, manage, or control the underlying cloud infrastructure.
  • Service customization is limited. The software configuration is largely or entirely uniform throughout the provider's customer base.
  • The supplier maintains the service software and provides service support subject to service levels. SaaS agreement maintenance and support provisions typically specify service levels and standards for the provision of support. Service levels define how well the provider needs to perform and are often accompanied by service credits if the provider fails to maintain certain service level standards.
  • Service fees accrue and are payable on a recurring, periodic basis. Fees may be based on provider subscription rates, the volume of customer use, or both.

Is Software as a Service More Cost Effective?

SaaS deployments are more cost effective (at least initially) than on-premise installations. SaaS customers generally pay a flat monthly fee per user for the software. SaaS implementations are also cheaper because companies don’t have to buy additional hardware or infrastructure to make the software work, so there are no capital expenditures with SaaS. You also generally don’t have to hire consultants to get the software installed as you often have to with traditional enterprise software. (There are exceptions to that generalization. For details, see Stephanie Overby’s article, “The Truth About On-Demand CRM.”) SaaS customers like the idea of a low up-front investment and a predictable expense stream, even though the cost advantages of the SaaS model may be counter-intuitive after three to five years of monthly fees.

Commercial risks in Software as a Service

Suppliers have quite understandably been marketing the potential benefits of usage-based payment models offered as part of cloud services. However, this carries an upside risk for customers if their usage of the services exceeds their expectations and budgeting. One of the key risks here is storage. If customers pay extra for more storage, they need to be certain they have policies in place to control increases in storage of information and data. Businesses need to think clearly about how long they really need to keep information (there is a clear link to legal obligations under data protection).

The most common approach now is a committed term of 1 to 3 years when signing up to an enterprise SaaS service. Suppliers want to be able to recognise revenue in their accounts and customers want to have a good degree of stability in their ICT delivery arrangements.

The commercial and contractual models for cloud service provision transfer risks back to customers, as compared to the outsourcing business model. Customers need to be able to manage a range of service delivery arrangements and to cope with the integration demands arising from using multiple cloud services. Customers need to be self-aware regarding their own capabilities to manage these risks. This may involve changes to business processes and cultures that ensure cloud services are used as efficiently as possible.

Cloud service provision, through its emphasis on standardised and commodity ICT, mean that ICT delivery organisations must work within the constraints of a standardised service offering. Businesses need to design and adopt processes that make the best use of the cloud service as it stands. A number of the traditional outsourcing providers provide consultancy-type services to assist cloud services users in these activities.

Data escrow

Software as a service data escrow is the process of keeping a copy of critical software-as-a-service application data with an independent third party. Similar to source code escrow, where critical software source code is stored with an independent third party, SaaS data escrow applies the same logic to the data within a SaaS application. It allows companies to protect and insure all the data that resides within SaaS applications, protecting against data loss.

There are many and varied reasons for considering SaaS data escrow including concerns about vendor bankruptcy, unplanned service outages, and potential data loss or corruption. Many businesses either ensure that they are complying with their data governance standards or try to enhance their reporting and business analytics against their SaaS data.

SaaS in the financial services sector

Firms subject to regulation by the Financial Conduct Authority (FCA) also have to comply with FCA security requirements.  The FCA has jurisdiction over data security breaches committed by financial services firms and continues the policy of its predecessor, the Financial Services Authority (FSA), in this area. The FCA actively pursues firms that fail to have adequate systems and controls in place to protect their customers' confidential details from being lost or stolen. For example, in 2018 it fined Tesco Bank over £16 million for failures relating to a cyber-attack.

Under the regulatory regime applying to financial institutions, firms have a responsibility to assess the risks of data loss and take reasonable steps to minimise the risks of this loss occurring. In this context, reasonable steps are deemed to be those that are proportionate to the nature, skill and complexity of the operations taking place.

Although the obligations of a financial institution are no different whether data is stored in a cloud or not, the cloud presents certain challenges in managing third-party suppliers who are responsible for handling such data within a cloud environment. At the centre of this is who has access to the data. It is easier to establish in more traditional models of service provision where the data is and who has access to it at any given time. This is more of a challenge in cloud service provision models.

The FCA has issued guidance to clarify the requirements on firms when outsourcing to the cloud and other third-party IT services. It sees the cloud as encompassing a range of IT services provided in various formats over the internet. This includes, for example, private, public or hybrid cloud, as well as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).

Here to help

SaaS is ubiquitous and any business looking to use or deploy IT solutions today will encounter it. The COVID-19 pandemic has accelerated the already fast-paced adoption of cloud computing by everyone from start-ups to multinationals. A key issue for customer and supplier is ensuring that the correct contractual and commercial agreements are in place to safeguard value for money but also that the software meets the specific needs of the customer. Software development for companies used to be highly bespoke and whilst SaaS creates opportunities for speed of access and off-premises maintenance, it also has the potential to leave a customer the victim of over-standardisation i.e. one-size fits all software solutions that don’t meet the customer’s business needs.

EM law specialises in technology and contract law. Get in touch if you need advice on a SaaS agreement or have any questions on the above.


Adtech

Adtech - ICO report into adtech and real time bidding

On 22 January 2021, the Information Commissioner’s Office (ICO) announced its resumption of an investigation into real time bidding (RTB) and adtech. The investigation had been put on hold by COVID-19. Simon McDougall, ICO Deputy Commissioner, commented in a statement that the “the complex system of RTB uses people’s sensitive personal data to serve adverts and should require people’s explicit consent, which is not happening right now.”

The ICO will continue its investigation with a series of audits focusing on digital market platforms. It will issue assessment notices to specific companies over the coming months, so that it can gauge the state of the industry.

What is adtech?

Adtech (short for advertising technology) is the umbrella term for the software and tools that help agencies and brands target, deliver, and analyse their digital advertising efforts. If you have come across the terms "programmatic" or "omnichannel," then you may already know a little about what ad tech does.

Programmatic advertising, for instance, buys target audiences instead of time slots: Think about buying ad space that reaches a particular demographic wherever it is instead of buying a prime time TV spot and hoping the right people are watching.

Omnichannel marketing reaches target consumers across all channels -- mobile, video, desktop, and more -- within the context of how they've interacted with a brand (those first seeing an ad will receive a different message from those who have engaged with that brand a number of times). Adtech methodologies seek to deliver the right content at the right time to the right consumers, so there's less wasteful spending.

What is real-time bidding?

Real-time bidding (RTB) is an automated digital auction process that allows advertisers to bid on ad space from publishers on a cost-per-thousand-impressions, or CPM, basis. CPM is what you pay for one thousand people to see your ad. Like an auction, the highest bid from relevant ads will typically win the ad placement.

ICO report

On 20 June 2019 the ICO issued an update report into adtech and real time bidding. The report was unofficial and highlighted ways in which advertising technology was in many cases systemically breaking data protection and e-privacy laws. Particular concerns included:

  • Adtech companies are not collecting personal data lawfully when dealing with customer cookies because instead of relying on consent (as stated in the Privacy and Electronic Communications Regulations (PECR)) they are using legitimate interest as their legal base. Even if legitimate interests were the correct base, a data processor would need to carry out a variety of tests and impose safeguards on data collected by that reasoning. A lot of adtech companies are therefore additionally failing to exercise their legitimate interest legal base correctly, regardless of the fact it is the wrong base to begin with.
  • Explicit consent is not being obtained when processing special categories of data.
  • Data Impact Protection Assessments are either not being carried out when necessary or being carried out incorrectly.
  • Privacy notices are not giving data subjects the information they need to be informed under GDRP and PECR. They are also undermining the transparency principle expected of all data processers.
  • Detailed profiles are being created on potential targets for advertising and are then shared among hundreds of bidders. The data minimisation and storage limitation principles are being undermined for this reason.
  • Security measures to ensure personal data is protected and appropriate safeguards when transferring data internationally are often being undermined or ignored.

Progress so far

In January 2020, the ICO's Executive Director for Tech Policy and Innovation published a blog about progress so far (Adtech - the reform of real time bidding has started and will continue). He noted the ICO's continued concern about the issues already raised but added that the Internet Advertising Bureau (IAB UK) and Google are starting to make the changes needed.

The IAB UK has responded to pressure from the ICO and aims to make the sector more aware of data protection principles. It recognises the need to address issues related to cookies and special categories of data and will publish UK-focused guidance. (IAB UK sets out actions to address ICO’s real-time bidding concerns, 9 January 2020). The ICO has supported googles decision to phase out third party cookies over the next two years which is indicative of the changing landscape of online marketing.

Moving forward

Due to sensitivity of the work, the ICO will publish its final findings, once it has concluded its investigation. In the meantime, Mr McDougall advises organisations operating in the adtech space to urgently assess how they use personal data, in particular their compliance with obtaining individuals’ consent, reliance on legitimate interests, deployment of data protection by design and default and use of data protection impact assessments.

Using legitimate interests as a legal basis in adtech

Using legitimate interests as the legal base for adtech has become commonplace. This is unsurprising given that it means no mechanism to obtain or record consents is needed.

The ICO online guidance "When is consent appropriate?" says that ‘If you need consent under e-privacy laws to send a marketing message, then in practice consent is also the appropriate lawful basis under the GDPR’. The ICO Adtech Update expands on this:

  • Trying to apply legitimate interests when GDPR-compliant consent has been obtained would be unnecessary and could confuse individuals.
  • Where an individual has given consent they would expect processing to cease when they withdrew consent. However, an entity relying on legitimate interests might seek to continue processing in this scenario, which would be unfair.

The ICO Adtech Update also makes the point that reliance on legitimate interests for marketing activities is only possible if organisations are able to show that their use of personal data is proportionate, has a minimal privacy impact, and individuals would not be surprised or likely to object. The ICO considers that the processing involved in real time bidding (RTB) cannot meet these criteria and legitimate interests cannot be used for the main bid request processing. The ICO does not rule out use of legitimate interests for other purposes, such as a demand-side platform supplementing a bid request with additional information.

Data protection impact assessments (DPIAs)

Controllers should carry out a Data Protection Impact Assessment (DPIA) before beginning processing that is likely to result in a high risk to the rights and freedoms of individuals (Article 35, GDPR). The ICO has published a list of processing operations likely to result in such a high risk, for which DPIAs are mandatory. The ICO Adtech Update confirms that Real Time Bidding, as used in adtech, involves several such processing operations. The ICO draft Direct Marketing Code states that the type and volume of processing that you can undertake in the online world, and the risks associated with that processing, mean it is highly likely that a DPIA will be required before processing begins.

Data minimisation

The GDPR requires that personal data collected must be limited to what is necessary in relation to the purposes for which it is processed. The ICO Adtech Update states that the creation of detailed profiles, repeatedly updated with information about individuals' online acitivities, is disproportionate for the purposes of targeted advertising. It is also intrusive and unfair, in particular as individuals are often unaware that the processing takes place and the privacy information provided does not clearly inform them what is happening.

Data integrity and confidentiality

Under the GDPR personal data must be stored securely. The ICO Adtech Update noted that real time bidding often involves sharing personal data with adtech companies in non-EU jurisdictions, resulting in international transfers. Further participants have no real control over the other adtech companies with whom data is shared. Contractual controls are insufficient; appropriate monitoring and technical and organisational controls are also required.

Accountability

Data controllers must be able to demonstrate their compliance with the GDPR. The ICO Adtech Update notes that the complexities of the adtech ecosystem mean that many adtech companies will find it difficult to understand, document and be able to demonstrate how their processing operations work, what they do, who they share any data with and how any processors are vetted and controlled; and how they can enable individuals to exercise their rights.

Accuracy and storage limitation

Other GDPR requirements include that data must be accurate and kept up to date and that personal data must be kept for no longer than is necessary. The ICO Adtech Update highlights the fact that because of the vast number of adtech companies involved in real time bidding it is difficult to ensure compliance with these principles. The ICO Cookie Guidance states that it is necessary to check that the duration of any cookies is appropriate; any default durations should be reviewed.

Here to help

Adtech has revolutionised the marketing industry and was firmly in place before the introduction of GDPR in 2018. It is now the ICO’s aim to bring this boom industry in line with UK data protection law. If you have any questions on adtech and data protection, data protection law more generally or on any of the issues raised in this article please get in touch with one of our data protection lawyers.


Incorporated By Reference

Terms Incorporated by Reference - Contract Law

When scanning a contract it is common to encounter schedules, annexes, appendices that are incorporated by reference to other documents, additional contracts and supplementary terms and conditions. Often this referenced material is essential to the form and consequences of a legal agreement. And too often it is overlooked. But when can this additional material be insufficiently incorporated into a contract, rendering it of no legal consequence?

Reasonable notice must be given if terms are to be incorporated by reference

Terms and conditions which are not immediately visible will be effectively incorporated by reference into the relevant contract as long as reasonable steps are taken to bring existence of the terms and conditions to the notice of the other party (Parker v South Eastern Railway Company [1877]). Once drawn to the attention of the other party, incorporation will take place if the latter proceeds in such a way that he is deemed to have accepted the terms (i.e. he proceeds without raising any objections).

Notice

For a term to be considered incorporated by reference into a contract, notice of that term must be given before or during the time of contracting. In Olley v Marlborough Court Hotel [1949], the claimant booked a room in a hotel owned by the defendant. Inside the door of her room was a notice stating that the hotel was not liable for anything lost or stolen unless the item had been given to the management to look after. When the fur coat of the claimant was stolen from her room, she sued the defendant for damages. It was held that because the contract had been made at the reception desk before the parties got to the room, and because notice of the term was only given after the formation of the contract, it was not an incorporated term and the claimant could sue the defendant for damages.

Contractually binding

The second rule required for clauses to be considered incorporated by reference is that they must be found in a document intended to be contractually binding. In Chapelton v Barry Urban District Council [1940] the claimant hired a deckchair from Barry Urban District Council to use on a beach in Cold Knap (a district in South Wales). The claimant took two receipts from the beach attendant, on the back of which were the words "the council will not be liable for any accident or damage arising from the hire of the chair". The chair was defective and broke, injuring the claimant. He sued the council, who relied on the clause on the receipts to protect them from liability. The Court of Appeal held that the clause could not protect the council, as the receipt was not a document that one would expect to contain contractual terms.

However it is important to note that if someone signs a contractual document it is automatically considered to be binding, even if the party has not read the terms. In L'Estrange v F Graucob Ltd [1934] 2 KB 394 the Court of Appeal held that a written document was contractually binding even though the claimant had not read the document and the clause was in "regrettably small print".

References

Referring a party to another document which contains terms can constitute reasonable notice, even if they don’t have the document and it’s difficult for them to access (Thompson v London Midland [1903]). The more onerous and unusual the terms are, the more clearly they have to be brought to the other party’s attention to get incorporated by reference. But if a document doesn’t look like it’s important/ part of the contract it’s less likely this will count as reasonable notice (Chapelton v Barry [1940]).

Visibility of term in relation to importance

The more burdensome or unusual the terms and conditions, the more clearly they should be drawn to the attention of the other party to be incorporated by reference. In this context, there is the well-known statement of Lord Denning that "some clauses I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient" (J Spurling Ltd v Bradshaw [1956]).

Thus there is a clear principle that, where there is a contractual provision which is particularly unusual or onerous, but not immediately visible, a party will not be able to rely on the clause unless he has done enough to bring the clause fairly to the attention of the other party and thereby successfully rendered the clause incorporated by reference. But also, it has been argued that, in some cases, unusual or burdensome terms set out in a contract which is about to be signed should also be brought to the attention of the signatory:

  • In One World (GB) Ltd v Elite Mobile Ltd [2012], the Court of Appeal was prepared to assume that the principle might apply to onerous and unusual clauses in a signed contract "in an extreme case where a signature was obtained under pressure of time or other circumstances".
  • In Amiri Flight Authority v BAE Systems Plc [2004], Mance LJ envisaged that the principle might apply where, for example, a car owner was asked to sign a ticket on entering a car park or a holiday maker asked to sign a long small print document when hiring a car.

Otherwise, the rule in L'Estrange v Graucob applies to signed contracts: the signatory will be bound whether he has read the contract or not.

Incorporation of terms by course of dealing

A customer may be bound even if, for example, the standard terms of sale only appear on the reverse of a post-contractual document such as the invoice (Spurling v Bradshaw), if the seller can establish a course of dealing incorporating the contested term. The party seeking to establish the course of dealing must show that:

  • There has been regular trading between the parties. Thus several transactions per month over a period of years might be sufficient for these purposes, but three or four transactions over a period of several years are unlikely to be enough. However, each case will depend on its own facts.
  • The trading has been consistent: previous trading must have been on the same terms and a consistent procedure must have been followed. In McCutcheon v David MacBrayne Ltd [1964], it was held that conditions set out on a risk note, which was only sometimes signed, were not incorporated into the parties' contract because each trade had consequently not taken place on the same terms.

Given the stringent and somewhat uncertain tests which must be satisfied before a court will hold that terms have been incorporated by a course of dealing, it is clear that this is an argument of last resort for the seller, to be used in negotiations and, if necessary, in court, if the customer has challenged the seller's terms. It is no substitute for proper contracting procedures.

Certainty of terms

A problem for the signing party now would be that if they argue that the terms were not incorporated by reference, then a court may not be able to enforce the contract as a whole because ‘unless all the material terms of a contract are agreed, there is no binding obligation’ (Foley v Classique Coaches [1934]). Given that the signing party of a contract may still want the benefit of the contract this could be a problem.

Watch out

Incorporation of terms applies to all areas of law. When you go to exercise your share option, for example, and you haven’t checked all the applicable rules because they are in supplementary documents. Or when you have been selling to the same customer for years but haven’t necessarily made every transaction subject to the same terms. Or when you seek to limit liability to a great extent but don’t draw attention to what could very arguably be an ‘onerous’ obligation on the other party of the contract. Being alive to these issue can have substantial impact.

Issues most frequently arise where one party is arguing their standard terms and conditions apply and the other argues they weren’t incorporated by reference. A checklist for incorporation in simple terms would be: if the contract has been signed then the parties are normally taken to have agreed to them (L’Estange v Graucob); terms have to be brought to the other party’s attention before the contract is concluded (Parker v South Eastern Railway) – the more onerous, the more clearly they have to be brought to the other party’s attention; if the documents referred to don’t look important or part of the contract then it’s less likely this will count as reasonable notice (Chapelton v Barry); incorporation is possible by a course of dealings (McCutcheon v MacBrayne) but requires a high threshold of proof – i.e. the other party actually knew about the terms and agreed to them.

If you have any questions about terms being incorporated by reference, incorporation of terms in other contexts, contract law more generally or if you need help with resolving a dispute please contact Neil Williamson.


Agile Software Development

Agile Software Development - A Legal Perspective

Agile Software Development came to the fore as a concept in 2001 with the bringing together of seventeen software developers in Snowbird, Utah. All with a shared vision of how software development could be improved for supplier and customer alike. They distilled their views in The Manifesto for Agile Software Development. Among other values it called for “customer collaboration over contract negotiations”. While a potentially wince inducing statement for the conventional lawyer, Agile Software Development has nonetheless proved popular (it is not to be forgotten, however, that such alternative management styles had been experimented with since the 1950s – most notably in Project Mercury, the first human spaceflight programme).

Software development is often a creative and exciting moment for any business. However someone - usually that's the legal adviser - needs to join the party thinking about risk - how it should be apportioned and how it should be minimised.

Waterfall method

In order to understand the conceptual basis for Agile Software Development, it is useful to know what it opposes. The first formal description of the waterfall model is often cited as the 1970’s article, Managing the Development of Large Software Systems by Winston W. Royce, although the term ‘waterfall’ was not explicitly used. The waterfall model was presented as a flawed, non-working model. It is the waterfall model to which Agile Software Development is opposed.

Here is how the waterfall method usually pans out:

Specification requirements – Design – Coding – Testing and Error Detection – Integration – Deployment – Maintenance.

This is how a product is usually made for a customer i.e. the customer specifies what it would like, the supplier creates the product, the product is tested. Once the product passes the tests it is then integrated in the customer’s system, tested again then goes live. Having gone live the supplier usually then provides support and maintenance services to fix any defects in the software.

Agile Software Development - Flexibility

Potential disadvantages of the waterfall method include the difficulty for customers to define their requirements clearly at the outset and that in many cases it does not easily accommodate changes to these requirements made throughout the project. By contrast to the waterfall method, an Agile Software Development project does not have detailed demands for the end product at the outset, although overall project scope and goals are agreed. Flexibility is the core to agile projects as they acknowledge that a customer’s demands and priorates may change from time to time during the course of the project.

Agile Software Development -Method

Typical features of the agile method include:

  • The goal is to deliver functionality and business value to the customer. This means that the solution to business goals and needs cannot necessarily be defined from the outset. It is only the goals and needs that are themselves initially important.
  • The project is divided into a number of sprints, each has its own set of priorities and goals. At the end of each sprint is an approval process assessed by the customer.
  • Planning and review meetings occur at the start and end of each sprint meaning close communication is maintained between the two parties.
  • The customer will reprioritise its needs from time to time, based on its ongoing assessment, and communicate this to the supplier. This may mean that some of the original requirements may become redundant over time.

Terminology

Although Agile Software Development projects can run on their own terms, there is generally a set of positions and relevant terminology used:

  • Product owner – customer’s representative who acts as the first point of communication with the supplier. Key functions include understanding the business needs and organising the development tasks. They must be present at sprint planning and review meetings.
  • Development team – typically supplier personnel. They are responsible for enacting the development sprints.
  • ScrumMaster – focuses on the development team, its progress, removal of obstacles and quality assurance. Typically a member of the supplier’s personnel.
  • Stakeholders – representatives of the customer’s management.
  • Product vision – an explanation of what needs to be developed, focusing on business goals and targeted benefits, rather than technical solutions.
  • Product backlog – a prioritised list of the customer’s business requirements that are to be developed during the project term. These can be reset at any time with new ones added and old ones deleted.

Importance of the product backlog

Maintenance of the product backlog (described above) is a key part of the agile process. The business requirements contained in it and the priorities accorded to them steer the development of the software and testing/approval procedures. These needs are generally described in the form of user stories. Customers should therefore ensure that any mandatory data protection law principles or cybersecurity obligations are contained within the product backlog.

Agile Software Development Scrum

The software development term ‘scrum’ was first used in a 1986 paper titled The New New Product Development Game. The term is borrowed from rugby, where a scrum is a formation of players and is illustrative of teamwork. Scrum is an agile framework used for complex projects (sometimes called extreme programming). Here are its key components:

  • Sprint – a timeboxed effort in which development takes place.
  • Sprint planning – establishes sprint goals.
  • Daily scrum – each day during a sprint, the team holds a daily scrum, preferably at the same place and time, and not longer than fifteen minutes. The scrum is concerned with what each player is contributing to a present/future sprint and has contributed to previous ones.
  • Sprint review and retrospective – demonstrates the work from the current sprint and improve processes respectively.
  • As another sprint begins, the product owner and development team select further items from the product backlog and begin work again.

Legal remedies for a dissatisfied customer

In a waterfall-type agreement the customer can rely upon damages, termination or remedial work in the case of defects or delays. In the case of Agile Software Development it can be difficult to determine whether there is actually any delay or defect because the flexibility of the system means that either can be easily buried behind prioritisation or vague notions of acceptability. Meaning that a delay could be deemed unprioritised by a product backlog and therefore not really a delay or the lack of an accepted definition of acceptance could allow a supplier to argue that no defect exists. The informality of decision-making can also make it difficult to gather the relevant evidence in case of a perceived breach of contract.

Time limits

Time, whilst fluid under an Agile Software Development process, is also bound to sprints and usually given a deadline. In a standard arrangement the customer would estimate the project duration and the number of sprints. It is, however, the discretion of the supplier/customer as to whether or not to formally agree to such estimates. This will need to be negotiated before an agreement is reached. Whilst setting time limits may be tempting, it may also be the undoing of the whole purpose of an agile agreement, in that flexibility will seem undervalued. On the other hand, having some framework in place to ensure contractual remedies is by no means discouraged.

Liability

Here are a some risk areas to be aware of:

  • Not meeting specific requirements within the original timeframe may not necessarily be seen as a breach of the agreement (as they may be re-arranged in the backlog).
  • Acceptance criteria of a sprint – if the agile software development contract is unclear around acceptance criteria the parties can be left arguing over whether an element of the build is completed or not. Acceptance criteria should be described in detail in any agreement so that there is no reliance on less formal descriptions that may be contained in user stories.
  • It is common for agile software development projects to go over budget. Leaving aside delays or quality issues that ramp up costs, if a customer walks into a project not really sure about what they want then it can often happen that their eyes will light up when the developer says “hey, do you want the product to do this cool thing”.
  • Everyone needs to be involved. Developing software using agile methodology is quite an intense process, depending on the project. As it is a collaborative process the parties need each other to be on focused on the project and communicating with each other the whole time. If a key member of the team suddenly goes AWOL then the project may grind to a halt.

Agile Software Development in practice

Agile Software Development as a methodology has the potential to produce creativity and customer/supplier satisfaction  on paper and in practice. It is important, however, to be aware of the potential legal pitfalls from the outset so that each party feels satisfied with the contents of an agreement before moving forward. It is also significant to note that agile methods require both parties to commit to a significant level of time and resources. If either party is remotely located or overburdened with other responsibilities (and so unable to focus on the agile project) the chances of success will be limited.

EM law specialises in technology and contract law. Get in touch if you need advice on Agile Software Development agreements or have any questions on the above.