Protect Your Goodwill

Most Traders work very hard to establish goodwill in their business.   Goodwill is the reputation which a trader builds up in relation to specific goods or services which attracts customers.  If a competitor tries to steal that goodwill then, in legal terms, it is known as “passing off”.  Passing off occurs where a person or organisation sells goods and/or services and purports to be another person or organisation, usually a more established brand or competitor, when that is not in fact true.

Passing off attracts strict liability which means that the Defendant will be liable even where he was unaware of the fact that he was using the trademark or the goodwill belonging to another business.  Therefore intention is not required for someone to be guilty of passing off.   Typically, a claim in passing off arises when someone has copied a competitor’s name or packaging.

Passing off protects traders’ goodwill in relation to their goods and services and so only traders who have generated goodwill will be able to bring an action for passing off, a company or an individual who has not traded will not have a cause of action.

To bring a passing off action, you must be able to demonstrate that:

  • The public associate the goods that you produce or the services that you provide with you.
  • You have built up a reputation in the goods and services and goodwill is therefore attached to that.
  • A third party has made misrepresentations to the public, whether intentionally or not, leading or likely to lead the public into believing that the goods or services offered by them are your goods or services.
  • This has caused damage to the goodwill of your business.

The remedies available in a claim for passing off include applying for an injunction to stop the Defendant from using the Claimant’s trademark or goodwill and/or pursuing a claim for compensation where damage has been caused to the Claimant’s reputation or he has lost potential revenue due to the Defendant’s actions.

Picture of Luke Patel

Luke Patel

Luke Patel
Partner
Commercial Dispute Resolution Team
LPatel@LawBlacks.com
0113 227 9316
@LukeLawBlacks

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Cambridge Analytica – Facebook issued record fine

The Information Commissioner’s Office (“ICO”) has announced that Facebook is to be fined £500,000 for its part in the Cambridge Analytica scandal.

The ICO concluded that Facebook failed to safeguard its users’ information and be transparent about how such data was harvested by others. The Information Commissioner Elizabeth Denham said:

“Facebook has failed to provide the kind of protections they are required to under the Data Protection Act…Fines and prosecutions punish the bad actors, but my real goal is to effect change and restore trust and confidence in our democratic system.”

In the first quarter of 2018, Facebook took £500,000 in revenue every five and a half minutes. The fine is for two breaches of the old Data Protection Act 1998 and this was the maximum fine available under previous legislation. Due to the timing of the breaches, the ICO was unable to levy the penalties introduced by the European General Data Protection (“GDPR”), which caps fines at the higher level of €20m (£17m) or 4% of global turnover – in Facebook’s case, $1.9bn (£1.4bn). The fine levied under the pre-GDPR rules means this financial blow to Facebook is very limited compared to what they will face under the GDPR.

The inquiry has also resulted in warning letters being sent to 11 political parties with notices compelling them to agree to data protection audits. The ICO’s report is an interim paper, released to guide a parallel inquiry by the DCMS select committee in the Commons. The full report is due in October 2018.

Other European nations are free to follow up with their own investigations if they decide the company broke rules in their country. Determining such fines and whether they will be levied under previous data protection laws or the GDPR will be a matter for the Information Commissioner of that jurisdiction to determine.  Facebook is currently under investigation in the US, at both federal and state levels for violating a consent decree agreed with the Federal Trade Commission in 2011 obligating the company to keep promises about the preservation of privacy, made to users.

Tate Chakrabarty

Tate Chakrabarty
Associate Solicitor
Corporate and Commercial Team
TChakrabarty@LawBlacks.com
0113 227 9260 

Posted in Company & Commercial Law | Leave a comment

It’s the end of the (copyright) world as we know it

The world was a different place in 1988.  The Soviet Union was still in existence, the Berlin Wall hadn’t yet fallen, the only Star Wars being discussed was President Reagan’s anti‑missile shield and the internet was still a twinkle in Tim Bernard-Lee’s eye.  It was also the year that the Copyright, Designs and Patent Act 1988 gained Royal Assent.  This piece of statute (with some amendments) has been the key piece of Intellectual Property (“IP”) legislation in England and Wales for the last 30 years.

It’s no surprise that given the huge leaps in technology which have happened since then that a lot of people feel that IP law has not moved with the times.   The freedom to access the internet and the ease with which content can be published has created scenarios that could not have been envisaged back in 1988 and, as with any situation, there are always those who seek to benefit or profit from it.

In what is arguably the largest shake up in copyright law, MEPs will be voting (or have already voted depending on when this article is read) on whether or not the Copyright Directive will come into law.

What is the impact of the Copyright Directive?  Well there are numerous Articles it seeks to bring in but, in short, it looks to tighten up copyright protection and it also seeks to reward the creators of content by forcing websites to: (a) ensure that something called a “link tax” is paid (which, in very basic terms, is a licence fee for every time an article is linked by another website), and, secondly, (b) police any content that is posted on the website.

This creates a number of logistical issues – firstly, in the collection of any of the aforementioned “link tax”, such as who will pay it, how it will be collected etc, and, secondly, because websites will be forced to use artificial intelligence to police their websites.  Critics (such as Wikipedia) state that this will result in huge swathes of information disappearing from the internet and, specifically, perhaps melodramatically, has been referred to as the death of memes, gifs and other similar modern day internet eccentricities.

Whatever the outcome of the vote, even if unsuccessful at this point in time, it is fair to say that IP law needs to adjust to the internet age, which means that businesses need to stay savvy and up to date with these changes.

Pete Konieczko-Hansom

Pete Konieczko-Hansom
Associate
Corporate and Commercial Team
PKonieczko-Hansom@LawBlacks.com
0113 227 9384

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Airbnb – playing with fire?

Over the last few years, the popularity of short term holiday or business letting websites has increased and shows no sign of slowing down. It’s easy to see why. The hosts can rent out their property when it suits them and don’t have the burden of becoming a full time landlord. The guests get an affordable and often unique place to stay. But what are the downsides? There are plenty of stories floating around on the internet about horror hosts or nightmare guests. But are there other potential issues with this type of arrangement?

Unfortunately, the answer is yes.

Where the properties are subject to mortgages, the terms of those mortgages may prohibit or restrict the use of the property in this way. Similarly, the buildings and contents insurance will undoubtedly also contain strict requirements governing how the property may be used or occupied (breach of which may invalidate the policy). If the property in question is leasehold (typically flats but some houses are as well), the way in which the property owner may deal with or occupy the property will also be restricted by the terms of their lease.

Most residential leases will prohibit or restrict (for example on specific terms or with landlord’s consent) (a) the ability of the property owner to sub-let or to allow others into occupation of the property;  and (b) how the property can be used – for example only as a private residence. There are usually additional covenants requiring the leaseholders not to do anything which would cause a nuisance to the other leaseholders in the building.  If the property owner breaches any of the terms of the lease (also known as leasehold covenants), then the landlord may be entitled to take legal action. In fact, there have been a number of cases in which the landlord has done exactly that.

In Nemcova v Fairfield Rents Limited, Ms Nemcova owned the leasehold interest in a flat. She advertised the availability of the flat on the internet for short-term lettings and granted a series of such lettings (in total for about 90 days a year and generally to business visitors as opposed to holiday lets).  The lease did not contain a covenant prohibiting sub-letting the property save for the in the last 7 years of the term.  However, it did contain a covenant not to use the property or permit it to be used for any illegal or immoral purpose or for any purpose whatsoever than as a private residence.  Having received complaints from other flat owners about the short-term letting arrangements, the landlord took action and sought a determination from the Tribunal that Ms Nemcova had breached her lease. The question was whether the short-term lettings meant that the property was being used for purposes other than as a private residence.

The First-Tier Tribunal agreed with the landlord and Ms Nemcova appealed.  The Upper Tribunal considered the matter in detail and, in particular, the meaning of “private residence”.  The material point was the duration of the occupier’s occupation.  The Upper Tribunal considered that in order for a property to be used as a private residence, there must be a degree of permanence going beyond being there for a weekend or a few nights.  Ultimately, the Judge concluded that “having considered the context of the grant of the lease, and the nature of the intended relationship between lessor and lessee taking account of the obligations entered into, I am of the view that in granting very short term lettings (days and weeks rather than months)…breaches the covenant”.

More recently, on 1 May 2018, His Honour Judge Luba QC handed down his judgment of an appeal by a flatowner who had been found by the lower Court to be in breach of his lease by letting out his flat to provide short term accommodation to tourists, business travellers and others. The flatowner had covenanted not to: (a) part with or share possession of the whole of the property or permit any company or person to occupy it save by way of an assignment or underlease and not to do so without the prior written consent of the landlord; and (b) use or permit the use of the premises or any part of it otherwise than as a residential flat with the occupation of one family only.

The landlord sought an injunction restraining him from continuing to let the flat out on Airbnb style platforms.  The Judge at first instance agreed with the landlord. The flatowner appealed.  His Honour Judge Luba upheld the Judge’s findings.  In particular, his view was that there had been a breach of the clause restricting parting with or sharing possession or occupation and the user covenant had been breached because the flat was not being used as a residential flat but as short term temporary accommodation for transient visitors paying for such used by way of commercial hire.

Landlords and tenants are advised to check the terms of the leases carefully to avoid potential disputes between themselves or with other leaseholders.


Rachael Donnelly
Associate
Property Litigation Team
RDonnelly@LawBlacks.com
0113 207 1094

Posted in Commercial Dispute Resolution | Leave a comment

Heterosexual civil partnerships

In February 2017 we posted a blog on the continuation of the battle for heterosexual civil partnerships. Since then, Mr Keidan and Mrs Steinfeld have taken their case to the Supreme Court and have left the judge calling it a ‘blatant inequality’. The Supreme Court has found that the non-availability of civil partnerships for heterosexual couples is a breach of the human rights law.

Although it has been deemed a success, the judgement however still hasn’t obliged the government to change the law but it is most certainly a sign of hope for heterosexual campaigners who wish for civil partnerships.

The Supreme Court’s decision makes it more probable for the government to act on the topic whether they agree or disagree. The Government also have accepted this inequality but believe that time is required to allow a confident decision about the future. Prime Minister Theresa May commented and told Parliament that she would consider the case with ‘great care’.

An online petition from after the initial court hearing in February 2017 has reached 130,000 signatures from human rights campaigners in support of Civil Partnerships for everyone.

Our alternative view on this case is that we believe civil partnerships will eventually phase out and that this is more likely to happen than extending civil partnerships to heterosexual couples. We also believe that it will be a long time coming before the law changes.

The next step for Mr Keidan and Mrs Steinfeld is them later going to Whitehall to deliver a letter to the Equalities Minister. If successful the couple will be likely to try and persuade the government to change the law on civil partnerships making it available for everyone.

Paul Lancaster

Paul Lancaster
Partner
Family Law Team
PLancaster@LawBlacks.com
0113 227 9215

Posted in Family Law | Leave a comment

Fighting the System – Service Charge Disputes

Paying service charge will be familiar to most people holding flats or houses under a long lease.  A leasehold owner owes various obligations to the freeholder (or a management company, where present) as set out in the lease including paying ground rent, contributing towards the insurance of a multi-occupier building and paying service charge, generally, the largest component of any financial obligation.

Service charge is intended to permit the freehold landlord to act for the good of the whole building or development in providing services and maintenance. Hence, the amount of service charge demanded may go up and down and may spike dramatically if major works are required.  Most leases will allow the landlord to claim estimated costs of works ahead of time or an amount towards a sinking fund for anticipated future works.

It is common for leaseholders to balk at service charge demands and it is certainly not unknown for landlords to over claim or even seek to profit.  Service charge demands are required to be reasonable but that can be a very subjective term and landlords and leaseholders often have very different perspectives.

What can leaseholders do if they feel they are being overcharged for services and repairs?  Below are a few possibilities.

  1. Request a summary of the service charge from the landlord as per section 21 of the Landlord & Tenant Act 1985 – Leaseholders then have the right (under section 22) to request further information within 6 months of receiving the summary. It is worth bearing in mind that a large demand for service charge may be reasonable if the building needs work!
  2. Take action at the management company level – it is very common for service charge to be controlled by a management company, the shareholders of which are the leaseholders themselves. This is often overlooked as a remedy but if the leaseholders are dissatisfied then a sufficient body of them can call a meeting of the management company, appoint new directors and then install new managing agents or take over the management direct.
  3. Seek the judgment of a tribunal – leaseholders can bring a service charge dispute to the First Tier Tribunal which will rule on whether a demand is reasonable and make reductions if appropriate. Leaseholders should also note that the tribunal may take a broad approach to what is reasonable.  In the recent case of De Havilland Studios v Peries for example, the tribunal ruled that even though replacement of windows in a building would have been the better option, the landlord’s decision to simply repair the existing windows was not unreasonable, simply not optimal, and so the landlord was entitled to charge for the work.
  4. Exercise enfranchisement rights – there is a raft of rights available to groups of leaseholders who want more control over the property, from taking over management of a building from the landlord to purchasing the entire building. This is a major step with complex legal requirements and protocols and it is worth seeking legal advice to make the most of these opportunities.

    Picture of Luke Patel

    Luke Patel

Luke Patel
Partner
Commercial Dispute Resolution Team
LPatel@LawBlacks.com
0113 227 9316
@LukeLawBlacks

Posted in Commercial Dispute Resolution | Leave a comment

The first over the line – Dixons Carphone

Dixons Carphone (“DC”) is investigating a hacking attempt which involved almost six million credit and debit cards and over a million customer data records. The incident could be the first significant data breach to be investigated by the Information Commissioner’s Office (“ICO”) under the General Data Protection Regulation (“GDPR”) and the Data Protection Act 2018. The company is in the embarrassing position of having to admit a significant data breach has occurred for the second time in three years and just weeks after the new data protection laws came into force last month.

According to DC the breach was discovered last week, but the hack itself began in July 2017, involving 5.9m payment cards and 1.2m non-financial personal data records (such as name, address or email address). DC also confirmed that only 105,000 non-EU issued payment cards affected did not have chip and pin protection.

The outcome of the ICO investigation and subsequent action will be keenly watched especially if the breach is deemed to have taken place after the GDPR compliance deadline of 25 May 2018. Ambiguity arises because the breach occurred or commenced in pre-GDPR times (July 2017) when the Data Protection Act 1998 was in force. If the incident is deemed to be subject to GDPR rules, the ICO could potentially fine DC up to 4% of its annual global revenue. Last year the group reported total sales of £10.5 billion and a fine under GDPR may potentially be a figure worth hundreds of millions of pounds. Under the Data Protection Act 1998 the maximum fine would be significantly less.

The ICO are playing their cards close to their chest, saying: “It is early in the investigation. We will look at when the incident happened and when it was discovered as part of our work and this will inform whether it is dealt with under the 1998 or 2018 Data Protection Act.”

Britain’s National Crime Agency (“NCA”) said it was heading a criminal investigation into the hack, working with the National Cyber Security Centre, the Financial Conduct Authority and the ICO. Mike Hulett, the NCA’s head of operations said: “The complexity of these inquiries means this is an investigation which will take time.”

The incident reflects a long-term complacency around cybersecurity issues for many companies, despite the introduction of GDPR earlier this year. This data breach is the first such heavily publicised breach in the UK since the GDPR and Data Protection Act 2018 have come into force – there will undoubtedly be many more. It could well undermine consumer confidence in DC whose share price fell 3.1% after disclosure of the breach. Some companies (such as DC) are always going to be a rich source of credit card and personal information for cyber criminals. Though DC has said there is no evidence of fraud occurring, as the data is now in the hands of cyber criminals it clearly leaves the victims of this breach exposed to potential phishing attacks.

Tate Chakrabarty

Tate Chakrabarty
Associate Solicitor
Corporate and Commercial Team
TChakrabarty@LawBlacks.com
0113 227 9260 

Posted in Intellectual Property | Leave a comment

Finally an end to the gig-economy worker conundrum?

The Supreme Court’s Judgment in Pimlico Plumbers and another v Gary Smith could spell an end to gig-economy ‘jobs loophole’ being used to avoid worker status. The Supreme Court’s dismissal of Pimlico’s recent appeal has confirmed that their workers are in fact just that: not the self-employed contractors that their contracts with Pimlico sought to label them as. This could have significant ramifications for several other high profile cases on the same subject.

Facts of the Pimlico case

Mr Smith had worked exclusively for Pimlico on a self-employed basis. After suffering a heart attack he sought to reduce his hours from 5 to 3 days per week; a request that was denied by Pimlico, ultimately resulting in his dismissal. Mr Smith made several claims to the Employment Tribunal for unfair and wrongful dismissal, entitlement to pay and discrimination. He has been successful at every stage of his claim including in the Employment Appeal Tribunal and Court of Appeal, having been found to be a worker under s230(3)(b) of the Employment Rights Act 1996 and being “in employment” for the purposes of the Equality Act 2010.

The significant factors for the Supreme Court in drawing the distinction between self-employed and worker status lay ultimately in the strict requirements that Pimlico placed upon its workers. All of these factors would indicate that Mr Smith worked for Pimlico, not that he was a supplier to them.

So what does this mean for Mr Smith? As a worker he is entitled to several rights not afforded to him as a self-employed contractor such as:  statutory sick pay, protection for whistleblowing, protection from discrimination and statutory paid holiday – rights many people assume come as standard when working for a company.

Decisive factors

The decision hinged on Mr Smith’s inability under his contract to reject work, his inability to make decisions on working hours. Ultimately the Supreme Court found Pimlico’s arguments that Mr Smith paid pay his own tax and used his own tools to complete work unconvincing as justification that he was genuinely self-employed. Whilst Mr Smith was required to provide his own tools, the job had to be carried out whilst wearing a branded uniform and driving a branded van, fitted with GPS. Workers are generally required to provide a personal service but Pimlico allowed its plumbers to swap jobs. Pimlico insisted this proved Mr Smith was self-employed, however the ability to swap shifts was only within the pool of plumbers working for Pimlico at any given time. Mr Smith’s ability to reject work and negotiate hours was hampered by a secondary contract requesting he work a minimum of 40 hours per week. Ultimately the control exercised by Pimlico overwhelmed the credibility of its contract which did not reflect the reality of the situation, a common theme in all of these related worker cases.

Consequences for the gig- economy  

With the surge in gig-economy related opportunities of late, exploiting technological advancements the law is playing catch up and high profile cases on workers’ rights such as Uber, Addison Lee and CitySprint are starting to close in on this fast growing market. A Supreme Court decision sets a strong precedent in advance of Uber’s upcoming appeal. The gig economy won’t be stopped in its tracks by this decision but the brakes are certainly being applied.

Tom Moyes

Tom Moyes
Partner
Employment Team
0113 227 9238
TMoyes@LawBlacks.com


Posted in Employment Law | Leave a comment

Islamic and Civil marriage; Shariah law and Divorce

I recently met a new client seeking some advice about a pre-nuptial agreement. He was a young man who was potentially going to marry his partner in an Islamic ceremony and then they would both move into his home which he had bought prior to the beginning of the relationship. The young man was accompanied by his mother who was worried about the way in which he owned his property and wanted some advice about protection.

I asked the usual questions about the relationship; in particular when they were due to marry. The answer was that this was to be an Islamic ceremony and so there would be no engagement in particular and that the marriage would be planned over a short period of time before the ceremony. There was no plan to register the marriage as a civil marriage alongside the Islamic marriage.

This answer changed things. If there was to be no registering of the Islamic marriage as a civil marriage then it would not be recognised as a ‘legal’ marriage according to the law of England and Wales. Accordingly there could be no pre-nuptial agreement as there were to be no nuptials. The client’s partner could not make any claims under the Matrimonial Causes Act 1973 as his wife because she would not be legally recognised as his wife.

Review

With good timing, in February this year a review was conducted by the Home Office into the application of sharia law in England and Wales. The review was chaired by Mona Siddiqui OBE and can be read in detail here

In particular the review focused on “whether sharia law is being misused or applied in a way that is incompatible with the domestic law in England and Wales, and in particular whether there were discriminatory practices against women who use sharia councils.”

In the example I referred to above, a sharia council would presumably be approached by the wife to make decisions about a separation. It is important to note however that the sharia council has no legal status and no legal binding authority under civil law and hence in the event that a marriage was registered as a civil marriage, the law of England and Wales (ie under the Matrimonial Causes Act 1973) would prevail.

Use of the shariah council by women

The review found that over 90% of people using sharia councils are women seeking an Islamic divorce. The reasons for this were several; ranging from cost, to family requirements, to religious beliefs. Also the review found shariah councils being relied upon because of the lack of a civilly registered marriage and the misconception that an Islamic divorce is all that is required.

Civil marriage alongside Islamic marriage

Evidence was then sought as to why Muslim couples do not register their marriage civilly alongside the Islamic marriage. A number of possible reasons emerged, from simple lack of awareness, to financial reasons including wanting to avoid the jurisdiction of the family court, to polygamy.

Implications in the family court

If the Islamic marriage is not registered civilly, there can be no divorce using the jurisdiction of England and Wales. Hence in situations for example where property is owned by one person alone, the other person cannot make any financial claim other than through the laws of property ownership, which are much stricter and less open to discretion as in the divorce law of England and Wales. The financially disadvantaged client who has entered into an Islamic marriage but not a civil marriage will therefore find themselves in a much worse position.

The future

The review recommends legislative changes to the Marriage Act 1949 and the Matrimonial Causes Act 1973, such to ensure that civil marriages are conducted before or at the same time as the Islamic marriage ceremony. This would ensure that a greater number of women would have the protection of family law in divorce.

It does seem rather bizarre that if a couple were married in another country in which an Islamic marriage was legally recognised, outside of England and Wales; they would then be able to use the divorce laws here, without having to register the marriage civilly. Yet those who have the Islamic ceremony here with no accompanying civil ceremony cannot.

Andrew Smith

Andrew Smith
Associate Solicitor
Family Law Team
AJSmith@LawBlacks.com
0113 3222807
@AndyLawBlacks

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Drink driver escapes lengthy jail term due to legal loophole

Despite being over 2 ½ times the legal alcohol driving limit and killing an 11-year old boy in an accident near Leeds, a self-employed farm worker has been jailed for just 16 months.

Harry Whitlam was visiting his mother, who worked at the farm, when a tractor driver, Gary Green, reversed into him and he later died in hospital.

As the incident was on private land at a farm, it could not be tried under the Road Traffic Act 1988, where maximum sentence is 14 years in jail and a driving ban.

Instead the case was brought by the Health and Safety Executive (HSE) under ’Failing to ensure the safety of persons other than employees’ under the Health and Safety at Work Act 1974  where the maximum sentence is 2 years. Additionally, as there is no driving ban for such an offence, Green can return to driving immediately on release.

In England, the ‘drink drive limit’ is 35 micrograms of alcohol for every 100 ml of breath. The accident was at 9.15am and the police advised that Green’s reading was 90 at the scene and then 74 at the police station. He told police that he had drunk around 4 pints of beer at the pub and then 2 cans of beer at home, but expert evidence presented at trial suggested he had probably had around 13 pints before going to bed at around 2am.

Green pleaded guilty to the offence and after sentencing, the Court was told that he had 2 previous convictions for drink driving.

Harry’s mum, Pamela Whitlam, said after the trial “It is not okay for anyone whether on a public road or private land to be drunk and get behind the wheel of a vehicle” and is now campaigning for ‘Whitlam’s Law’ with private land covered by the same drink driving laws as those for public roads.

Her local MP, Alec Shelbrooke, has raised the issue in the House of Commons and also met with the Department for Transport asking them to consider amending current legislation to close this loophole.

Nathan Clay

Nathan Clay

Nathan Clay, Solicitor
Personal Injury & Medical Negligence Department
NClay@LawBlacks.com
0113 227 9355
@NathanLawBlacks

Posted in Personal Injury and Clinical Negligence | Leave a comment