Eversheds recently hosted its annual Technology, Media and Telecoms conference in front of a wide audience made up of personnel from some of the UK’s largest technology companies.
Opening the conference, Mark Gregory, chief economist at EY, spoke about the great global rebalancing the world is witnessing as we emerge from the recession. Growth, he explained, is returning, but it is weak and certainly lower than expected following a recession of the severity the eurozone has experienced, and significant risks still exist.
According to Gregory, as China rebalances its economy and the world economy continues to change, the necessity for business models to evolve. The economy is shifting, he said, but with the consumer being squeezed and companies currently struggling to grow, some segments will do better than others. Companies that are innovative in their models and those who actively use big data to identify opportunities are likely to do better.
Mark Rhys-Jones, a partner in Eversheds’ litigation and dispute management group, spoke at the conference, delivering a sector case law update looking at the most common pitfalls to avoid, as disputes in the IT sector continue to rise.
He said that software licensing is a fertile area for disputes to arise and it is important for customers to be correctly licensed and for suppliers to secure the right to a fair revenue stream from licences. According to Rhys-Jones, understanding your rights as early as possible is vital for avoiding issues and securing the best deal.
He said: ‘Following UsedSoft v Oracle, software developers may seek to grant licences that don’t amount to a “sale”. Licensees must consider the impact upon their intended use of the software.
‘The scope of the licence is common battleground at audit time, typically revolving around vague definitions. Close scrutiny, consideration and clarification prior to agreement is essential.’
Rhys-Jones also spoke about exclusion and limitation clauses, examining the case of Fujitsu Services Ltd v IBM United Kingdom Ltd. He explained that the court had enforced a very broad exclusion clause, emphasising that where contracts are negotiated between experienced business people of equal bargaining power and skill, courts are unlikely to interfere.
Nevertheless, he said, it is still good practice not to seek to draft limitations or exclusions that are too broad in scope and not to try to bury them within the small print.
Rhys-Jones also looked at the issue of liability for costs incurred by hackers in the case of Frontier Systems Ltd t/a Voiceflex v Frip Finishing Ltd, where the court considered whether liability to pay triggered when hackers used services.
He said: ‘Consider allocation of risk at the outset and set out who is responsible for calls made by unauthorised third parties. Include clear wording as to when liability to pay is triggered — when service is provided or when customer actually uses it. Make sure the contract sets out what end users must do to secure the system.’
Elsewhere, senior associate Dave Hughes delivered a session on privacy and information law, with the warning that the latest draft of the General Data Protection Regulation (GDPR) suggests that fines for enforcement could increase to five per cent of the global, potentially group-wide, turnover of those businesses in breach.
Big data was another area covered in Hughes’ session, with the warning that privacy laws apply based on the facts, regardless of any stated contractual position. Parties cannot use contracts to tell a fairy tale in terms of liability for compliance with privacy law requirements.
Hughes said: ‘It is important that businesses understand how the rules governing fair and lawful collection, use and other processing apply to the data they are responsible for, as well as any future uses the business anticipates. A clear risk assessment process can help ensure these issues are considered at an early stage, when any necessary changes to the proposals can be made without significant wasted costs.
‘When in force, the GDPR will require these assessments for certain new projects involving personal information, so it is a good idea for businesses to become familiar with their use now.’
Hughes pointed attendees to the Privacy Impact Assessment Guidance issued by the Information Commissioner’s Office as a key starting point for such processes being developed, if not already in place.
Charlotte Walker-Osborn, partner and head of Eversheds’ technology, media and telecoms (TMT) sector at Eversheds, ran a session with Rupert Tate from EMC, which looked at the changing technology landscape. This session was run as an interactive discussion using ‘Chatham House’ rules — key themes were around the complexity of contracting models in the sector and the dynamic between tech suppliers as suppliers and tech suppliers as customers, particularly when supplying or receiving goods and services from or to other tech companies.
Walker-Osborn said: ‘The TMT sector is going through unprecedented changes, particularly in terms of the number of tie-ups between companies and the change to a new world of technology [led by disruptive technology such as cloud and the increasingly changing pattern of tech use from desk-bound to ‘on the go’], with consumers demanding consumption on many platforms. In terms of the conference, it was a pleasure to welcome so many valued clients and contacts of the firm to discuss the issues that are keeping them awake at night, as well as enabling businesses to prepare and to be abreast of changes in related areas such as HR and pensions, intellectual property issues, issues in trading in new territories and portfolio management.’