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US Quarterly Newsletter - April

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To help our US clients and contacts stay up-to-date with evolving issues, our quarterly newsletter brings you a summary of the key European legal stories and updates from the last quarter.

Welcome to our newsletter - to help our US clients and contacts stay up-to-date with evolving issues, our quarterly newsletter brings you a summary of the key European legal stories and updates from the last quarter.      We hope that you will find the content of this newsletter useful and encourage you to contact us should you have any questions on the topics covered in this newsletter or indeed if we can help with any other matter.

Intellectual Property

Svensson: Has the CJEU saved the Internet?
On February 13, 2014, the Court of Justice of the European Union ("CJEU") delivered its judgment in Nils Svensson and Others v Retriever Sverige AB, Case C-446/12, a landmark decision about the operation of copyright on the Internet.  The CJEU ruled that the owner of a website may use 'hyperlinks' to redirect internet users to protected works available on other websites without the authorisation of the copyright holder of the linked website, provided that the linked website is 'freely accessible', i.e. can be accessed by anyone using the Internet.  Nathan Capone reviews and comments on the case.

No Glee for the Gleeks
A comedy club has successfully taken on 20th Century Fox in a trade mark infringement case concerning its use of “glee”.  Georgina Harris analyses the case and although Fox may well appeal the decision it highlights the foresight and value in protecting a brand as a business grows.

CJEU confirms customs can seize fakes purchased for personal use
The Court of Justice of the European Union recently heard a reference from the Danish Courts in a case concerning whether a fake Rolex, purchased by an individual from a Chinese website and seized by Customs in the EU, should be destroyed.  Lucy Nunn reviews the case and comments that this is a positive (if unsurprising) decision for rights owners and sends a strong message to purchasers of fakes online that EU Customs can and will seize and destroy counterfeit items coming into the EU, even those purchased for personal use.  

Anti-piracy measures must be proportionate, says top EU Court
In a dispute between Nintendo and Italian company PC Box, the Court of Justice of the European Union has ruled that a manufacturer of a games console is protected against circumvention of its technological protection measures (“TPMs”) only where those measures proportionately seek to prevent use of illegal copies of video games.  Emma Kingstone discusses the case.

Privacy and Information Law  

Complex cloud contracting
Phil Lee observes that contractual agreement over basic data protection terms can often prevent cloud deals.  This failure to reach contractual agreement is so often due to a misunderstanding, or (sometimes) a perverse interpretation of, EU data protection requirements.  Phil identifies some of the key things to consider in cloud deals and how to address them.  

European Parliament votes in favour of data protection reform
On March12, 2014, the European Parliament (the “Parliament”) overwhelmingly voted in favour of the European Commission’s proposal for a Data Protection Regulation (the “Data Protection Regulation”) in its plenary assembly. The vote cemented the Parliament’s support of the data protection reform, which constitutes an important step forward in the legislative procedure. Following the vote, Viviane Reding – the EU Justice Commissioner – said that “The message the European Parliament is sending is unequivocal: This reform is a necessity, and now it is irreversible”. While this vote is an important milestone in the adoption process, Samantha Sayers comments that there are still several steps to go before the text is adopted and comes into force.  

How does EU and US privacy regimes compare?
As an EU privacy professional working in the UK, one of the things that regularly fascinates Phil Lee is each continent's misperception of the other's privacy rules.  Phil provides a brief 101 in EU/US privacy differences whilst concluding that while they may go about it in different ways, the EU and US each share a common goal of protecting individuals' privacy rights and although neither regime is perfect, each could learn a lot from the other.  

CNIL: a regulator to watch in 2014
Over the years, the number of on-site inspections by the French DPA ("CNIL") has been on a constant rise.  Based on the CNIL’s latest statistics, 458 on-site inspections were carried out in 2012, which represents a 19 percent increase compared with 2011.  The beginning of 2014 was marked by a landmark decision of the CNIL - on January 3, 2014, the CNIL pronounced a record fine against Google of €150,000 ($204,000) on the grounds that the terms of use available on its website since March 1, 2012 allegedly did not comply with the French Data Protection Act.  Google was also required to publish this sanction on the homepage of Google.fr within eight days of it being pronounced.  Oliver Proust identifies several lessons to be learnt from the CNIL's decision.  

Progress update on the EU Cybersecurity Strategy
On February 28, 2014, the European Commission hosted a “High Level Conference on the EU Cybersecurity Strategy" in Brussels.  The conference provided an opportunity for EU policy-makers, industry representatives and other interested parties to assess the progress of the EU Cybersecurity Strategy, which was adopted by the European Commission on February 7, 2013.  Michael Brown provides us with an update from Brussels.  

EU Parliament's LIBE Committee Issues Report on State Surveillance
The European Parliament’s Civil Liberties Committee (“LIBE“) issued a report in mid-February 2014 into the US National Security Agency (“NSA“) and EU member states’ surveillance of EU citizens (the “Report“).  Samantha Sayers discusses the background to this Report, highlights the key recommendations and concludes that it is now more likely than ever that the EU/US Safe Harbor framework will undergo some changes in the near future.  

History in the making: the first 'cookie rule' fines in Europe
On January 14, 2014, the Spanish Data Protection Regulator (the “Spanish DPA“) issued its first fines for infringement of Spain’s implementation of the EU’s “cookie consent” requirement. The decision concludes that two companies had failed to comply with the obligation to provide clear and comprehensive information about the cookies they used.  Nuria Pastor analyses the decision and provides some messages to take away.

Technology 

UK Government pledges £45m funding increase for the 'Internet of Things'
Speaking at the CeBIT technology trade fair in Hannover, Germany, UK Prime Minister David Cameron has pledged an extra £45 million from the UK Government to develop technology for the so-called ‘Internet of Things’.  This extra funding will take the UK’s total funding to £73 million, which clearly underlines the UK Government’s desire to make the UK a world leader in digital technology. Christopher Perrin discusses the implications.  

OFT guidelines issued for games producers
On January 30, 2014, the UK’s consumer law regulator, the Office of Fair Trading ("OFT"), published the final version of its principles for online and app-based games (“Principles“).  These Principles are the result of the OFT’s investigation (launched on April 12, 2013) into unfair trading practices associated in online and app-based games.  The regulator has imposed a tight compliance deadline of  April 1, 2014 for games companies to ensure that their practices are in line with the Principles.  Samantha Sayers highlights these principles and the importance of assessing current user journeys and practices.

Competition

Google and the European Commission: the new 'search' frontier
At the beginning of February, the European Commission published a memo regarding its Google 'vertical search' investigation. The investigation, in part, relates to the way in which Google displays specialised comparison search results for various products such as flights, hotels or electrical goods. The Commission's main concern is that Google displays its own specialised search results more favourably than competing companies like Foundem or Shopzilla.  John Cassels and Daniel Geey analyse Google's subsequent commitments and comment on the wider implications of this memo.  

Prize promotions in social media
Social media, the El Dorado of media platforms…endless possibilities…wide and far reaching audiences….easy access for consumers…fun, interactive and innovative…a constantly changing environment…no wonder we are seeing a growing surge towards companies operating their prize promotions in such a lucrative space.  However, a constantly changing environment means that companies need to ensure that they are constantly on top of legal compliance requirements when operating their prize promotions. Sonal Patel provides a brief checklist of the things companies should consider.

Corporate and Finance

New EU Financial Markets legislative proposals: Liikanen Report leads to more regulatory roll-out
On January 29, 2014, on the back of the Liikanen report, the EC published two provisional legislative proposals, intended to be adopted by June 2015, one on structural measures improving the resilience of EU credit institutions (the "Structural Reforms Proposal" or "SRP") and the other on reporting and transparency of securities financing transactions (the "Reporting and Transparency Proposal" or "RTP").   Our Derivatives and Structured Finance group summarises each in turn.  

A guide to third party security
In this guide, Andrew Evans looks at how this type of security is different to direct security and the key considerations for lenders to be aware of and take into account when they are being granted third party security.  

New central clearing service for triparty repo market
Daniel Franks, a partner in our Derivatives and Structured Finance group, has recently been interviewed by Lexis Nexis in relation to the recent launch by LCH.Clearnet and Euroclear, in collaboration with Banque de France, of the €GCPlus clearing service for triparty repos.   In this article, Daniel comments on the timing of this launch, the difference between bilateral repo and its possible effect on the market.

Tax  

Employee ownership trusts - explanation of changes following consultation
On EO Day 2013 HM Treasury announced that “Following the findings of the Nuttall Review and in order to support this sector, the Government has decided to introduce two tax reliefs to encourage, promote and support indirect employee ownership”. The Finance Bill (see clause 283 and schedule 33) published on March 27, 2014 contains helpful changes in response to the consultation on the original drafts of these reliefs.  Graeme Nuttall offers an explanation of the changes.

UK's 2014 Budget
Our tax team provide an in-depth review of the key measures in the UK's 2014 Budget including a review of implications for non-residents; equity incentives; personal allowance and income tax thresholds; pensions; and accelerated payment notices.  

Is it possible for taxation of corporate profits to be 'fair'?
Taxation of corporate profits is usually economic double taxation because profit derived from companies is usually taxed (ISAs aside) in the hands of its eventual recipient, as dividend income or as capital gains following the sale of the shares. Nevertheless, Governments do have to impose tax charges on companies and similar artificial legal persons on, at least, an annual basis to prevent hoarding.  George Gillham discusses this in greater detail.  

Dramatic jump in number of raids by HRMC
In England and Wales a power to apply for search warrants is made available to HMRC through the Police and Criminal Evidence Act ("PACE").  PACE provides HMRC with a set of powers that are designed for use by law enforcement agencies.  It means that the tax crime is tackled in the same way as any other crime.  In September 2010 the Chief Secretary to the Treasury, Danny Alexander, pledged to make funding available to HMRC for a five-fold in criminal prosecutions for tax evasion.  George Gillham reveals the dramatic rise and also offers insight into what happens when the search warrant is served upon you or your company.   Employment  

Changes to National Minimum Wage
Neil Johnston reveals the increase in the UK's National Minimum Wage ("NMW") which will take effect from October 1, 2014.  The increases represent the first rise in real terms to the NMW rates since 2008 and the Government has stated that there will be bigger rises in future rates of the NMW provided economic conditions improve.  

Shared parental leave - draft regulations published
The UK's Department for Business, Innovation and Skills ("BIS") published the draft regulations outlining the new system for shared parental leave and pay on March 5,  2014.  The draft Shared Parental Leave Regulations 2014 are due to come into force on October 1, 2014 and are intended to apply to babies whose expected week of childbirth begins on or after April 5, 2015 (or, in the case of adoption, children matched or placed for adoption on or after April 5, 2015).  Alongside these draft regulations, BIS has also published draft Statutory Shared Parental Pay (General) Regulations 2014 and draft Maternity and Adoption Leave (Curtailment of Statutory Rights to Leave) Regulations 2014. BIS is asking for views/comments on the draft legislation as it is aiming to make the new system meet the needs of parents and employers and make it as simple as possible to use. Margaret Davis sheds further light on the issues.  

Extended right to request flexible working - implementation date confirmed
Following a delay in the introduction of the new extended right to request flexible working, which was due to come into force in April, the UK Government has now confirmed the new implementation date. The extended right will apply from June 30, 2014. Nicholas Thorpe recommends that if you have not updated your flexible working policies to reflect the new right, the ACAS Code and supplementary guidance, then now is the time to do so.  

Crackdown on "false" self-employment
The UK HMRC’s latest proposals to close tax “loopholes” could have serious consequences for business consultants, self-employed people and employment businesses. The Government wishes to prevent the cloak of self-employment being used to dodge tax and national insurance (NI) payments.  However, as James Warren comments, the planned new rules are so wide that they may strike at many legitimate business arrangements.

Immigration  

Statement of changes to the Immigration Rules
On March 13, 2014, the Home Secretary for the UK laid before the House of Commons a Statement of Changes in Immigration Rules which are designed to improve flexibility for applicants applying under the work route of the Points Based System and to help boost economic growth whilst the Government continues to “be tough on those who break the rules or flout the law”. Some of the changes are effective from March 13, 2014 whilst others will come into force over the next few months. Lynn McCloghry highlights these key changes.  

Tier 1 (Investor) - report issued by the Migration Advisory Committee
On October 9, 2013, the Minister for Immigration asked the Migration Advisory Committee (the “MAC”) to consider whether the investment thresholds under Tier 1 (Investor) category are appropriate to deliver significant economic benefits to the UK. At present, the minimum level of investment for the Investor category is £1 million but accelerated settlement status can be achieved by investing either £5 million or £10 million and migrants may use money loaned to them by UK banks when making the investment.  Lynn McCloghry highlights the main recommendations and encourages any applications under the current rules be submitted as soon as possible before such recommendations are implemented.


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