You are on page 1of 16

OUT-LAW MAGAZINE

Spring 2006 Issue 14

out-law
CODE BREAKER MYSTERY OF EMAIL
SIGNATURES

LIBEL HELL DOWN BUT NOT OUT

FACTOR X
legal advice for technology businesses from out-law, part of international law firm pinsent masons

OFFSHORING STARS REVEAL THE FRINGE BENEFITS

ISSUE 14

out-law
2 3 4 5 7 10 13 14 15 BEST OF OUT-LAW.COM EDITORIAL COLUMN: CORPORATE ROUGH DIAMOND: EMAIL SIGNATURES COVER STORY: OFFSHORING FEATURE: DEFAMATION OUT-LAW MAIL BAG COLUMN: BLAIRS LEGACY OUT-LAW LITE

MOST WANTED!
X-MEN: THE LAST STAND TWENTIETH CENTURY FOX. X-MEN: THE LAST STAND GOES ON GENERAL RELEASE ON 25TH MAY

BEST OF OUT-LAW.COM

If you would like to get in touch, please contact one of the principal members of the OUT-LAW.COM team listed below. You can email us or, if you prefer, you can reach us through your usual Pinsent Masons contact or via www.out-law.com

THE BEST OF OUT-LAW.COM


Jury nds Microsoft copied anti-copying patents
A Texas jury has concluded that Microsofts Ofce and Windows XP and Autodesks AutoCAD programs infringed anti-piracy patents. It ordered the companies to pay a total of $133 million to David Colvin, founder of z4 Technologies. The patents describe a form of product activation. Microsoft spokesperson Rachel Wayne told OUT-LAW.COM: While we are disappointed with this verdict, we continue to contend that there was no infringement of any kind and that the facts in this case show that Microsoft developed its own product activation technologies well before z4 Technologies led for its patent. Microsoft awaits the courts decision on whether z4 knowingly withheld information from the US Patent Ofce about other companies product activation technologies when submitting its patent applications.

The pick of the best legal news from OUT-LAW.COM


Card issuers must protect foreign shopping
Consumer safeguards on credit card purchases made in the UK will generally extend to cover purchases made abroad, whether in person or online, as a result of a Court of Appeal victory for the Ofce of Fair Trading. The Consumer Credit Act lets consumers make a claim directly against their credit card company or the supplier if they discover problems with goods or services purchased with their card. The credit card issuer and the supplier are jointly liable if the consumer has a valid claim for misrepresentation and/or breach of contract by the supplier provided the cash price of an item is over 100 and less than 30,000, and the credit limit is no more than 25,000. The March ruling overturns a High Court win for Lloyds TSB, Tesco Personal Finance and American Express Services Europe Limited last November.

London jon.fell@pinsentmasons.com susan.biddle@pinsentmasons.com Glasgow & Edinburgh john.salmon@pinsentmasons.com yvonne.dunn@pinsentmasons.com Leeds richard.watkinson@pinsentmasons.com Manchester rosemary.jay@pinsentmasons.com Birmingham andrew.hartshorn@pinsentmasons.com Hong Kong & Shanghai peter.bullock@pinsentmasons.com Brussels barbara.linehan@pinsentmasons.com
OUT-LAW.COM is part of Pinsent Masons, a law rm based in London with ofces in Brussels, Hong Kong, Dubai, the Peoples Republic of China and throughout the UK. These pages contain general information only. Nothing in this magazine constitutes legal advice. You should consult a suitably qualied lawyer on any specic legal issue. No part of this publication may be reproduced in any form without the written permission of the copyright holder and publisher, application for which should be made to the publisher. Opinions expressed in this magazine are not necessarily those of the publisher. All publishing and editorial enquiries should be made to: struan.robertson@pinsentmasons.com

Ruling blurs meaning of employee


Your contractors might be employees even when you have a written agreement with them that says otherwise. That is the effect of a ruling against Cable & Wireless which bestowed upon a telecoms specialist the rights of an employee. Despite being contracted as an agent, Mr P Muscat won a claim of unfair dismissal. Robyn McIlroy, an employment law specialist with Pinsent Masons, said the March ruling sends a warning to any company that uses agency workers or personal service companies to avoid employment liabilities. While this ruling does not mean that all agency workers will necessarily be deemed to be employees of the end user, it does mean that having a written contract that expressly denies the existence of an employment relationship is no longer enough in itself, she said.

Spitzer sues over adware


New York Attorney General Eliot Spitzer sued internet marketing rm Direct Revenue in April, alleging that the company installed pop-up ad programs on millions of computers without giving users proper notice. The adware came with downloads of other software. These applications are deceptive and unfair to consumers, bad for businesses that rely on efcient networks to do their jobs, and bad for online retailers that need consumers to trust and enjoy their online experience, he said. The suit is the latest in a series of spyware related actions led by Spitzer, who last year settled a $7.5 million claim against adware distributor Intermix Media. But Direct Revenue called it a baseless attempt by the Ofce of the Attorney General to rewrite the rules of the adware business.

REUTERS/MIKE SEGAR

WWW.OUT-LAW.COM

Attack of the cybermen


An old nemesis stalks the .eu domain name and the future is bleak
The .eu domain name has been hailed a success because 1.5 million variants were snapped-up within a week of the public launch which is STRUAN ROBERTSON rather like saying that people love cough medicine because it sells well in winter. A s a consequence of Britains 300,000 .eu registrations at the time of writing, how many .co.uk or .com names will be ditched in favour of an EU re-brand? Perhaps one or two. How many .eu names will front new, Europe-themed websites? Some. But I bet the vast majority will redirect trafc to another name or do nothing at all. L i k e empty towels on a beach in cyberspace, most .eu names have been reserved only to send tourists elsewhere. This is largely because the nuisance of cybersquatting has never gone away. Poachers can use the names to give criminal operations a sheen of legitimacy; but more often they are used simply to attract web trafc and prot from advertising. A site that carries nothing but ads can make a few hundred dollars a day, provided it draws the traffic, until such time as the brand owner recovers it. Examples are seen in the batch of dispute rulings issued daily by the World Intellectual Property Organisation (WIPO). A t y pi c a l ex a mpl e f rom A pr i l : francetelekom.com was transferred to France Telecom from someone in Panama. lawyers fee. (All such .eu disputes will be handled by the Czech arbitration court, where fees start at 1,190 euros). In each case, the name is transferred but no damages are awarded. And theres the problem. A squatter can ignore a claim, lose the name and still make a prot. Consequently, brand owners feel compelled to buy all variants of their own name because it is cheaper than legal action. New domains are swelling these portfolios of defensive registrations. Some moderation is prudent, as Verizon learned a few years ago. The US telco registered more than 700 Verizon-themed names, many of them derogatory. It lost this word g a m e wh e n s om e on e re g i s t e re d VerizonEatsPoop.com and launched a gripe site. Germany should have learned from Verizon. The EU allowed member states to submit a list of banned .eu names so Germany blacklisted 3-reich.eu, fuehrerdeutschland.eu and more. This is surely pointless. Perhaps its time to change the rules, to introduce a deterrent. Give the arbitrator discretion to make the losing party pay his fee. It might be difcult to enforce, but it is surely better than the status quo. Only when cybersquatting becomes unprotable can brand owners relax. They certainly can't afford to relax just yet: ICANN, the domain oversight body, is currently mulling the introduction of .tel, apparently intended to help people manage their contact information online. No doubt a stampede for .tel names will be misinterpreted as success.n
STRUAN.ROBERTSON@PINSENTMASONS.COM

EDITORIAL

BBC CYBERMAN AS CREATED FOR DOCTOR WHO BY KIT PEDLER & GERRY DAVIS

ONLY WHEN CYBERSQUATTING BECOMES UNPROFITABLE CAN BRAND OWNERS RELAX


The website was just a collage of ads for telecoms services. The owner did not ght. A brand owner can take a squatter to court, demand the return of a name and request damages. With luck, it will also recover some of its costs. The costs are high ve gures is common if the case is contested and higher still if the target is overseas. But location is irrelevant when the target cant afford to pay. Arbitration is a less expensive, more popular forum. The service run by WIPO is an example, where you can evict a squatter for $1,500 plus your

A suite of new duties could leave a sour taste in board room mouths

Directorscut
Reactions to the Governments latest plans for company law MARTIN WEBSTER reform might make you think that the end of the world is nigh. Much in the Company Law Reform Bill is uncontroversial and to be welcomed. A major theme of the changes is cutting red tape and encouraging entrepreneurship. T hink Small First ha s been the Governments declared intention (alas not reected in the mammoth Bills 500 pages and 900 clauses). Many changes are proposed to make life easier for small companies: no need to have a company secretary; simpler constitutional documents; and doing away with formal shareholder meetings, among others. And there will be no more public disclos u re of d i re c tors home addresses an issue for those v u l ner a ble to a n i ma l rights terrorists and other malcontents . This is all sensible stuff and few will mourn the pa s s i n g of t he old regime. But the gloves come off when we get to the new proposals for directors duties. The existing law is a hotchpotch of decisions made by judges over the last 150 years or so, some good, some bad. Clarity is not a virtue, with many of the cases dating from the nineteenth century when business and the dangers faced by investors were very different from today. So in a fit of good housekeeping the Gover nment wants to tidy up this ragbag of rules and principles and codify the law into an easy-to-read list of duties. Perhaps the civil servants imagined d irec tors carrying a little card in their pockets for easy reference when confusion looms over their boardroom duties. Alas, they couldnt leave it there. Having decided that codication of directors duties is a good thing, the urge to tweak the rules just a bit, here and there, proved irresistible. And the biggest tweak comes under the heading Enlightened Shareholder Value. That is a new principle which ha s been tacked on to the directors duty to promote the s uc c e s s of t he company for the benet of its memb er s a s a whole. T he result is t h a t directors a re now to be told that they must consider a number of additional factors when deciding what is best for their company: the long term consequences of a dec ision ; the interests of employees; the impact on the community and the environment. Of course, there is obvious conict here: what is good for shareholders may be bad for the community or the environment; what prospers the company long-term may impoverish employees short term. Resolving those conicts may be part of the directors job, but enshrining these conc er n s i n s t a t ute r i s k s encouraging sectional interest groups who may want to challenge a boardroom decision they dont like. Will Friends of the Earth and the TGWU buy a few shares in a company so they can sue the directors, in the companys name, for not giving sufficient weight to these new statutory concerns? T he dangers are clearly there, but it is too early to man the barricades just yet. The Government itself has put down over 100 amendments to i t s ow n B i l l , a nd t he Opposition have piled in with many more. The Bill is not expected to become an Act until the Autumn, and then not to come into force until April 2007, so there is plenty of time for more changes before the story is fully told. n
MARTIN.WEBSTER@PINSENTMASONS.COM

ROB McCALLOUGH

COLUMN

Sig
Faxing is still the number one method for sending and receiving ofcial international messages that must be signed for, a c c ord i n g to a re c ent Gallup/Pitney Bowes poll. It costs Fortune 500 companies an average of $15 million per year. I doubt that gure includes the cost of wasted space for a fax machine, the pre-fax call (I think you gave me a phone number) or the post-fax call (Did it come through?). By comparison, email is easy, doesnt need a cover sheet, doesnt arrive as a smudge on blue paper and is also a legitimate way of sending and receiving messages that must be signed for, in Europe and in the

IT DOESNT NEED A COVER SHEET, DOESNT ARRIVE AS A SMUDGE ON BLUE PAPER AND IS ALSO A LEGITIMATE WAY OF SENDING AND RECEIVING MESSAGES
WWW.OUT-LAW.COM

CHICAGO/CHICAGO/EMPICS

Directors duties: no sugar coating

SONY PICTURES. THE DA VINCI CODE GOES ON NATIONWIDE RELEASE ON 19TH MAY 2006

Email signatures are binding but thats a mystery to most

nhere
US. But the validity of email signatures is not well known. Lawyers once evangelised about the magical power of digital signatures badges of authenticity protected by cryptography. Yet very few lawyer-client communications bother with them today because clients voice no appetite. Perhaps legal writings are already deemed impenetrable without extra technolog y. S o we c ont i nue to correspond in normal email. When it comes time to seal the deal, we still print, sign and fax. It doesnt have to be this way. A name typed at the foot of an email is still a signature. Englands High Court acknowledged this in April. An email had been sent from a struggling retailer, Nilesh Metha, to a bed maker in Portugal, J Pereira Fernandes. The email offered a personal guarantee for 25,000, but it wasnt signed. For that reason, Judge Pelling QC said the Portuguese creditor could not rely upon it in its claim for cash
WWW.OUT-LAW.COM

ROUGH DIAMOND

from Mr Metha. Judge Pelling wasnt expecting a digital signature or even a scanned copy of Mr Methas handwritten signature. All he wanted was Mr Methas name typed at the end. N Metha would have sufced, he said. Some laws require that documents are in writing and signed. T he S t a t ute of F r a u d s a nd Perjuries, from 1677, puts personal guarantees among them. It hasnt been amended to refer to email, albeit the Electronic Communications Act of 2000 allowed for such tweaks to be made with relative ease. This didnt trouble Judge Pelling. He simply looked to pragmatic guidance that came from the Law Commission in 2001. The Commission exists to promote the reform of English law. But it reasoned that reform was not necessary for most statutes requiring signatures. They could be satisfied by a functional test: whether the conduct of the wouldb e s i g na tor y i nd ic a te s a n

A NAME TYPED AT THE FOOT OF AN EMAIL IS STILL A SIGNATURE


authenticating intention to a reasonable person. Digital signatures, scanned manuscript signatures, typing ones name (or initials), and clicking on a website button are, in our view, all methods of signature which are generally capable of satisfying a stat utory signat ure requirement, it wrote. The DTI endorsed that view in 2002 and Judge Pelling seconded it. A name was missing from Mr Methas email so there was no binding guarantee. Even his initials might have sufced, he reasoned, providing always that whatever was used was inserted into the document in order to give, and with the intention of giving, authenticity to it. Judge Pelling did not have to consider auto-signatures that appear

on emails. He did consider the automatic display of a senders email address at the top of an email but dismissed that as incidental. Is an auto-signature incidental? We dont know. And he did not contrast the intentional acts of clicking Buy on a website (a signature, in the Law Commissions view) with clicking Send on an email. Fax machines will continue to beep and whirr because ambiguity persists. The 2000 Act failed its preliminary test Royal Assent was to be given by electronic signature, but practicalities frustrated the symbolic gesture. That failure proved prescient. Like the Queen, we cont i nue to rel y on t r a d i t iona l signatures, lacking the condence to change our ways. I dont think we need new laws; but the DTI should raise awareness. Like the missing page of an important fax, the message that email signatures are valid has somehow been lost in transmission. n
ROB.MCCALLOUGH@PINSENTMASONS.COM

IMAGES: X-MEN: THE LAST STAND TWENTIETH CENTURY FOX. X-MEN: THE LAST STAND GOES ON GENERAL RELEASE ON 25TH MAY

Offshoring is not just a battle to slash costs or nd special skills. Martin Priestley says todays leaders are seeking traction in tomorrows superpowers

COVER STORY ~ OFFSHORING

edge
In a complex and challenging time, the road of isolationism and protectionism may seem broad and inviting, yet it ends in danger and decline. President George W. Bushs State of the Union address in January 2006 dealt in unprecedented detail with the US approach to foreign policy, but the Presidents thoughts were not conned to the spread of democracy and the war on terror. The American economy is pre-eminent, but we cannot afford to be complacent, he said. In a dynamic world economy, we are seeing new competitors like China and India. Recent years have witnessed an emergence of new and exciting global markets with those of the BRIC countries (Brazil, Russia, India and China) to the fore. The term was coined by Goldman Sachs in a 2003 report that made

the

WWW.OUT-LAW.COM

cutting exercise. Rather, it has become an opportunity to win new customers and access new markets. IBM is among the so-called Big Six outsourcing providers. In April, Senior Vice President and CFO Mark Loughridge identified the BRICs as Big Blues key emerging markets. Were building capability in the emerging countries, especially in India and China, he said. In these two countries alone, we ended the rst quarter with 45,000 resources to support the local demand as well as global demand. Other IT service providers are also adapting to service global customers in the BRICs. Fujitsu announced in April that it has opened a facility in Shanghai to promote the full-

COVER STORY ~ OFFSHORING

astounding growth predictions for the four economies. Currently, the combined value of the BRIC economies in dollar terms is approximately 15% of that of the G6 economies. But Goldman Sachs suggested that the BRIC economies could be larger than the G6 within 40 years. President Bush spoke of the challenge posed by emerging economies, but challenge can bring opportunity. Business prospects in these regions will escalate as the globalisation juggernaut gathers pace and CEOs k n ow i t , a c c o r d i n g t o a r e c e n t PricewaterhouseCoopers survey. Seventye i g h t p e r c e n t of C E O s i n d evel op e d economies said their companies are going global to nd new customers. Only 48% said they were looking to reduce costs. A Gartner survey, reported in March, found that India remains the most popular destination for global offshoring, with China and Brazil competing for second place. But the primary rationale for investing in BRIC economies appears to be changing. Offshore outsourcing is no longer seen as purely a cost-

A GARTNER SURVEY, REPORTED IN MARCH, FOUND THAT INDIA REMAINS THE MOST POPULAR DESTINATION FOR GLOBAL OFFSHORING, WITH CHINA AND BRAZIL COMPETING FOR SECOND PLACE
scale penetration of Fujitsus platform products in Chinas rapidly-growing IT market. The Platform Solution Center offers a range of services, from consulting to system verification, of platform products from Fujitsu and others, enabling local and foreign customers trading in China to evaluate and pre-verify systems tailored to their needs before actual deployment. With IT systems becoming more diverse and complex, Fujitsu told OUT-LAW that providing such IT infra-

structure optimisation services close to where the system is to be deployed is becoming increasingly important for meeting customers local operational needs and assuring reliable and stable operation. The full-service facility has been designed to support customers global business expansion and growth. A satellite facility is opening in Hong Kong. Fujitsu (China) Holdings vice president Masayuki Tomimuro said, we will actively use our new Platform Solution Centers in Shanghai and Hong Kong as hubs for working closely with customers and as a place where we can help them to transform their IT ideas into reality. Campbell Robertson, director of HewlettPackards UK and Ireland Managed Services business, believes that offshoring provides a vehicle to businesses entering new markets. In the telecommunications sector, we are seeing more and more telecoms companies looking to acquire increasing numbers of end users in new markets, he told OUT-LAW. These telecoms companies need to create a

FOCUS ON CHINA
Many people expect China to achieve global economic dominance. But while many western companies are eager to exploit opportunities in China, the reaction of Chinese business appears to be more muted. Peter Bullock (pictured left), a partner in Pinsent Masons Hong Kong ofce, observes that domestic software and services companies are largely absent from the developing IT outsourcing market in China. It is sometimes said that the Chinese market for IT is so enormous that rms have little incentive to look overseas for more customers, he said. Furthermore, there remains a disconnect between the domestic vendors and the overseas purchasers, especially in terms of project management expectations, as well as the language capabilities of on the ground operatives, in a way not seen in India, the Philippines and Malaysia. The IT outsourcing services market is growing at an aggressive rate in the country up 16% in 2005 on the previous year, according to Analysys International. But the China-focused market analysts identied that the dominant players are from the west, with IBM, HP and Siemens leading the charge.

WWW.OUT-LAW.COM

ONSHORE OFFSHORING
A new model is being adopted by cost-cutting companies in the UK. While the offshoring of manufacturing and back ofce activities to lower cost economies will continue, some companies, particularly in the IT sector, have begun onshore offshoring. This involves bringing highly skilled personnel from India and elsewhere to work on specic projects in the UK. A company can still cut salary and associated costs by adopting this model but can also benet from an increased degree of control over the onshore offshore operations. This trend is borne out by Home Ofce gures showing that in 2004, 85% of the 22,000 work permits granted were to Indian nationals employed in IT, compared to just 1,827 in 1995.

COVER STORY ~ OFFSHORING

common infrastructure and offshoring allows them to align the costs of creating that infrastructure at the point of entry with the revenue to be generated from that market. Companies providing outsourcing services are expanding their services. They take advantage of their bases in emerging markets to set up hubs and provide integrated logistics services for customers. So in addition to manufacturing, they might offer local warehousing and fullment operations, tracking and repor ting. Consequently, the outsourcing providers use the advantage of geography to provide a faster, more costeffective route to market for companies looking to break new markets. Another Big Six provider, ACS, was a pioneer in establishing global production facilities and deploying what it calls a follow-the-sun operational model to support multinational clients. It is vital to have a local presence to support clients and gain access to clients in their home locales, said Chief Marketing Ofcer Lesley Pool. ACS has been building global capabilities to deliver information technoloWWW.OUT-LAW.COM

ACS WAS A PIONEER IN ESTABLISHING GLOBAL PRODUCTION FACILITIES AND DEPLOYING WHAT IT CALLS A FOLLOW-THESUN OPERATIONAL MODEL
gy and business process outsourcing solutions to meet clients requirements with both near and farshore capabilities. ACS is not alone in having traded in the BRICs for many years. Half of the 1,400 CEOs participating in PwCs survey identified an obvious business need for doing business there: to serve existing customers. There is no one rationale for outsourci n g , s ays H P s Ro b e r t s o n . M o d el s combining onshoring and offshoring can be very effective. Decisions on what to offshore and what to keep onshore need to be taken in the context of the downstream business, the end-user and the end-users customer. Rober tson points out that the basic

requirements of good customer relationships and end-user satisfaction are not going to go away. Local touchpoints can be very powerful, he notes. Indeed, in the financial services sector a number of institutions are using their decisions to maintain customer service centres onshore as a differentiator. IBMs Loughridge agrees. Its not just about putting resources in low cost countries, he said. Its about having access to the right skills in the right place for the right tasks. Its about bringing together the frontend capabilities with the back-end processes to provide higher-value solutions. Well continue to shift investments to these high growth markets. President Bush was right: emerging markets are introducing new players. But the outsourcing industry is evolving too, nding ways to save cost, drive innovation and simult a ne ou s l y bu i ld ma rket s ha re i n new territories. Complacency surely is commercial suicide but businesses in mature markets are not dwelling on threats. Instead, they are focused on opportunity. n
MARTIN.PRIESTLEY@PINSENTMASONS.COM

John Bunt tried to make internet service providers pay for the actions of customers. But Struan Robertson reports that the battle was doomed

FEATURE ~ DEFAMATION

Manon amission

This is not some tuppeny hapenny storm in a teacup, this is a truly vast case, the like of which English Defamation Law has never before seen, claimed John Bunt, suing AOL, BT, Tiscali and three individuals. It positively screams out for a trial. But the High Court wont be hearing another word against the ISPs. In March 2006, Mr Justice Eady absolved the ISPs of all responsibility for a catalogue of abusive comments that were posted on a Usenet internet discussion forum. Yet Bunt was r i g h t a b out t he novelty of his case: this was the first test of defences for ISPs that are found in the E-commerce Regulations of 2002. Bunt told OUT-LAW that he became the primary target of this abuse when he objected to comments made by a contributor, David Tilley, that celebrated the death of a local police woman. He says Tilley turned on him. (Ti lley told OU T-LAW another version of events, starting with Bunt insulting Tilleys wife.) At the time, Bunt had a edgling business selling laptop batteries online. Comments p o s te d to t he forum suggested t ha t B u nt wa s a fraudster and that his b a t ter ie s d id not work. Bunt sued Tilley for defamation and won. In September 2005, a court ordered Tilley to pay 1,000 in damages and to never refer to Bunt in future postings to the internet. But no money changed hands and the postings continued. Bunt believes that Tilley then recr uited t wo others, Paul Hancox and Christopher Stevens, to gang up on him. Increasingly offensive comments followed: over a period of 10 months, Bunt was labelled a thief, a batterer of women and children, a drug dealer and a paedophile. Tilley says nothing he did merited a court case. OUT-LAW also spoke to Hancox and Stevens who denied being recruited by Tilley. All three characterised the postings as banter or silly childish playground taunting in which Bunt gave as good as he got.

THE MAN IS A BLOODY MENACE WHO NEEDS HELP, NOT AN UNLIMITED, UNCENSORED AND UNEDITED SEWER PIPE INTO THE PUBLIC PSYCHE
WWW.OUT-LAW.COM

10

MISSION: IMPOSSIBLE III IMAGES COURTESY OF PARAMOUNT PICTURES. MISSION: IMPOSSIBLE III CURRENTLY ON RELEASE NATIONWIDE

Trafc, huh

FEATURE ~ DEFAMATION

AN ISP WHICH PERFORMS NO MORE THAN A PASSIVE ROLE IN FACILITATING POSTINGS ON THE INTERNET CANNOT BE DEEMED TO BE A PUBLISHER AT COMMON LAW
Bunt says he tried to stop the abuse by contacting the ISPs of Tilley, Hancox and Stevens AOL, Tiscali and BT respectively. He wanted them to pull the plug on his adversaries. In his legal lings against BT he wrote of Stevens: The man is a bloody menace who needs help, not an unlimited, uncensored and unedited sewer pipe into the public psyche. Each ISP has an acceptable usage policy that reserves the right to terminate user accounts in the circumstances Bunt describes; but they did not terminate. So with neither legal representation nor training, Bunt renewed his action against Tilley this time for breach of injuncWWW.OUT-LAW.COM

tion and named Hancox and Stevens as codefendants. He argued that their offending words were published via the services provided by AOL,* Tiscali and BT and that these companies should be held responsible. Justice Eady looked at Britains best-known c a se of inter net defamation , Laurence Godfreys successful claim against Demon Internet, in 1999. Demon acted as a host of defamatory material but failed to remove it promptly when made aware of it. Demons circumstances were different, in Justice Eadys view. He wrote: an ISP which performs no more than a passive role in facilitating postings on the internet cannot be deemed to be a publisher at common law. He also examined the E-commerce Regulations and the Defamation Act and again cleared the ISPs. As AOL pointed out in court, it did not host any of the material about which Bunt complained so could not remove it. Justice Eady drew an analogy between ISPs and postal services: both act as mere conduits for communications. And just as the postal

HOW TO DEAL WITH DEFAMATION


IF SOMEONE WRITES DISPARAGING COMMENTS ABOUT YOU ONLINE, THERE ARE TWO THINGS YOU CAN DO. 1. Have the comments removed: Contact the host of the comments rather than the ISP of the person who made them. Provide details of what was said and where. 2. Identify the defamer: A pseudonym might be all that you know but dont go to that person's ISP just yet: the ISP can't lawfully disclose names to the public without a court order. A solicitor can help you get an order that can be presented to the ISP and then you're ready to sue the defamer.

11

FEATURE ~ DEFAMATION

service has legislation to shield it from liability for the content of letters, so an ISP can rely upon a mere conduit defence in the E-commerce Regulations of 2002. BT was in a different position. It was a temporary host of the material because it continues to host Usenet newsgroups on its servers. Usenet dates back to 1980 and, by design, many servers will host copies of the same material. That material is generally deleted automatically after a few weeks. But BT has the ability to manually remove postings from its own newsgroup server before that automatic cull. So BT relied on another defence in the Ecommerce Regulations: it did not have actual knowledge of unlawful activity because the notice received from Bunt was insufcient to identify the offending posts. It was for the same reason that Tiscali and AOL did not respond to Bunts complaints about their customers. Unless an ISP is given full details of what was said and where, it cannot act. In any case, in Justice Eadys opinion, shutting down the user accounts would have been

draconian and pointless, since the individual Defendants would be able to obtain such services with great ease elsewhere. Bunt compares this argument to holding a gun seller blameless for gun crime on the basis that there are other sellers. The only remedy now open is to introduce some form of control, in other words, licensing, he told OUT-LAW. AOL and Tiscali also exercised a caching defence. The ISPs created a cache of the

THE ONLY REMEDY NOW OPEN IS TO INTRODUCE SOME FORM OF CONTROL, IN OTHER WORDS, LICENSING
offending internet pages, to accelerate their delivery to users; but they are allowed to do this. The E-commerce Regulations acknowledge that ISPs cache web pages to improve the user experience. The three ISPs succeeded in having the claims against them struck out. They could not be held responsible for comments about

which they knew nothing. Costs were awarded against Bunt in his claim against the companies. He is currently unemployed but owes Tiscali 18,000. The other parties costs have not been revealed. Despite the ruling, Bunt remains condent. At the time of writing he was awaiting a date for his case to proceed against Tilley, Hancox and Stevens. I dont consider that Ive lost, he said. The ruling that the ISPs are not responsible could even work in his favour, he suggests, limiting the individuals possible defences. The law in the UK is a truly wonderful thing, he concluded. I bear no grudge whatsoever against Justice Eady and it is absolutely fabulous that one man can pay 80 and end up in the Royal Courts of Justice being heard by one of the highest judges in the land ... My only regret is that his status precludes the opportunity to sit down with him one day over a glass and discuss the wider implications. n
STRUAN.ROBERTSON@PINSENTMASONS.COM

* The AOL Service is provided by AOL Europe Services SARL.

Keep your legal knowledge secure


LLM/PgDip Information Technology & Telecommunications Law online distance learning or attendance
Fast moving developments in information security, liability, intellectual property, e-commerce, access to public information and telecommunications mean equally changeable legal implications. Ours is the world's most established postgraduate course in Information Technology Law and whether for personal or professional development, it's ideal for lawyers seeking to formulate and apply law in the technology age. And, to make life easier, you can take the Masters qualification either by attendance at Glasgow Graduate School of Law, or by online distance learning. Commencing in September or February, to find out more call Carol Hutton on +44 (0)141 548 3481, or email carol.hutton@strath.ac.uk Ref. OUTIT1/06

www.ggsl.strath.ac.uk

12

WWW.OUT-LAW.COM

OUT-LAWBAG
MAIL
Throwaway society
I can only point out the current modus-operandi of Lexmark (Consumers dont recycle enough, say manufacturers, OUT-LAW News, 22/12/05): when there is a problem with a budget printer, they just send a replacement (the core of the printer only, none of its accessories). No problem with it except that one ends up with a useless corpse of a defunct printer and no recycle facility at hand.
A reader in Portugal (Name withheld by request)

EMAIL: STRUAN.ROBERTSON@PINSENTMASONS.COM COMMENTS ONLY PUBLISHED WITH EXPRESS PERMISSION OF AUTHORS

of police ofcers (including myself) and their forces, who were dealing with computer crime, worked extremely hard to raise the awareness of the need to establish the NHTCU to ght cyber-crime. I know that the majority of those concerned consider this to be a backward step. Without the NHTCU, high tech crimes will have to be dealt with by local forces unless it meets SOCA criteria (which will probably require cases to be multi-million pound crimes). Local police forces are unlikely to have sufcient time, funds, skills and

relevant experience to deal with hardened cyber-criminals. Moreover, the Condentiality Charter, which allowed businesses to report cyber-crimes to the NHTCU with a guarantee of privacy, will disappear. Businesses rely on information being kept condential, without it they will be even less inclined to report serious crimes to the police. Rumours and leaked information can and will result in severe damage to their reputation and bottom line. So why should they take the risk? SOCA needs to address this issue immediately otherwise the publics belief in the polices ability to tackle cyber-crime (developed by the hard work and insight of the NHTCU) will be lost.
Simon Janes International Operations Director, Ibas

EC report on digital signatures


The EC report (Commission

We put this to Lexmark. A spokesperson replied: "In Portugal, Lexmark will adhere very soon to AMB3E collective scheme which received mid-march its license from the Portuguese authorities for Waste Electrical and Electronic Equipment management. AMB3E is currently in the process of implementing up to 250 collection points throughout Portugal for consumers. Pilot operations should start in August, and the collection system should be fully operative in September. Meanwhile, consumers can return machines that are no longer in use to the point of purchase and Lexmark will collect them from there."

frustrated that people ignore digital signatures, OUT-LAW News, 20/03/2006) is very guarded in its words, but the facts are that: advanced electronic signatures work only within a small circle of trust (e.g. a manufacturer and its suppliers, with an in-house certication authority); verifying signatures after a long period is hugely problematic; and the signature standards are not designed for interoperability (they allow too many variations). Signature methods suffer from the general Public Key Infrastructure problem: commercial third parties cannot provide the required trust and liability support, even if they have gone through a national approval process which is forbidden by EU law.
Peter Tomlinson Iosis Associates

MAIL BAG

E-crime
Im glad that Tony Blair is planning to

make life hell for gangsters, drug trafckers and fraudsters with the help of the Serious Organised Crime Agency (NHTCU disappears into SOCA, OUT-LAW News, 0 4 / 0 4 / 2 0 0 6 ) . I m co n ce r n e d however, that e-crime seems to have been lost in the shufe. The National High Tech Crime Unit has been discreetly swallowed up by SOCA. In my time as a Scotland Yard detective, a number
WWW.OUT-LAW.COM

From a convicted phishing attacker


HI I HAVE READ YOUR STORY REGARDING OUR EBAY FRAUD AND WHICHED TO POINT OUT ONE ERROR IN YOUR REPORT. YOU STATE I RECIEVED 23 MONTHS IN ACTUAL FACT IT WAS 21.
Guy Levi Location unknown Im a criminal, get me out of here

PRISON BREAK CHANNEL 5 BROADCASTING

Editors note: We apologise to Mr Levi for our inaccuracy.


13

ADRIAN DENNIS / AFP / WPA POOL / PA

Tony Blairs pace of reform needs to slow down

Most people exp ec t Tony Blairs legacy to be the war in Iraq , not employment ROBYN McILROY law reform. It is barely recognised that his Government has revolutionised the way we work and the prole of our workforce. If you think that is an exaggeration, stop and consider the evidence. Since he came to power three terms and nine years ago, a minimum wage has been introduced so 16-year-old waiters earn at least 3 an hour and 22-year-old cashiers at least 5.05. Part-time and fixed-term staff have been shielded f rom getting le ss favourable pay and perks than their f ull -time collea gues . Workplace discrimination on the grounds of sexual orientation and religious belief is banned. Parents enjoy rights to time off for dependents, increased maternity leave, paid paternity leave, adoptive leave and a right to request flexible working. When it all gets too much, staff can exercise their statutory right to enjoy four weeks paid holiday. If they dont like what they return to, they might exercise new statutory grievance procedures. If bosses want to get rid of them for good, new statutory disciplinary procedures will apply. If sacked unfairly, an overhaul of the unfair dismissal regime helps more staff react: the qualifying period for claims has halved from two years to one. Theres more. Since April, staff at companies that outsource have had their rights strengthened and clarified, with an update to the

Employment reform no sweat

COLUMN

Fastforward
TUPE rules. And from October, many workers will be protected from a forced-retirement when age discrimination laws come into force. Pledging fairness, the Government promised that these reforms would promote economic stability, adaptability, exibility and competitiveness. And Blair can point out today that, in real

THE DTI ANNOUNCED A REVIEW OF THE STATUTORY DISPUTE RESOLUTION REGULATIONS A REGIME THAT HAS BEEN IN PLACE FOR LESS THAN TWO YEARS
terms since 1997, two million more jobs have been created and earnings are up 28%. However, the pace of change is too fast for many. Britains biggest bu siness organisation , the Federation of Small Businesses (FSB), has called for the brakes to be applied. It points out that there

are now 26 Acts of Parliament on employment issues . Yet the Government is not slowing down. A Parliamentary policy statement in March talked of new measures to encourage diversity in the workplace, to give people choices over how to balance work and family life and to protect vulnerable workers. The DTI also announced a review of the statutory dispute resolution regulations a regime that has been in place for less than two years. Even more reform is promised in the shape of the Work and Families Bill, its aim being to promote the lot of working families by April 2007. Controversially, 52 weeks maternity leave will be available to all pregnant employees, regardless of length of service. The period of statutory maternity pay will go up and flexible working rights extend beyond the parents

of young children to those who care for sick and elderly relatives. These proposed changes will undoubtedly benet employees, but the FSB is right that Tony Blair should stop for a rest. British business needs it. It needs to acclimatise to an environment of employment law that has evolved quickly. Office policies, practices and procedures should be allowed to settle without the burden for both employers and employees of constant updating. There is a risk that continual legislative tinkering will provoke a backlash. Granted, workers need protection; but at some point, possibly in the not too distant future, over-zealous reform could have a counter-productive effect on the protability of our businesses, by implication our employees, and eventually our nation. That would surely darken the hue of Blairs legacy. n
ROBYN.McILROY@PINSENTMASONS.COM

14

WWW.OUT-LAW.COM

OUT-LAWLITE
A MISCELLANY OF THE ABSURD AND IMPLAUSIBLY ACCURATE

Pigeons rufe eco feathers


From July, carbon monoxide sensors and mobile phones will be loaded in tiny backpacks on a team of California pigeons, according to New Scientist. Cameras around their necks will take aerial photographs. Text messages and pigeon pics will beam from the winged bofns of San Jose to a special pigeon blog run by the University of California.

Sins of science
Radio Frequency Identication (RFID) chips may be the mark of the beast, according to a new book about why Christians should avoid the tiny data-emitting devices. Early adopters like Wal-Mart and Tesco are alive to the protests of privacy groups but seemingly overlooked the wrath of God. Author Katherine Albrecht reckons the chips, particularly VeriChips human-implantable model, bear an uncanny resemblence to the mark described in the Book of Revelation. If shes right, a foul and loathsome sore is scheduled for those who wear the chips, according to Revelation. I hope I am wrong, she told Wired. Bar codes and Social Security numbers have evoked similar warnings.

US PATENT NO. 6982161

Pardon moo
Bovine burps and atulence account for 20% of the worlds methane pollution, according to scientists. But Californias Markus Herrema is helping our 1.5 billion cows ght global warming. His recently-patented backpack catches beastly belches and converts the methane into biomass which can be processed and sold as food or cosmetics.
Catch the pigeon online

Cleaning up
Two cleaning ladies are being investigated on suspicion of stealing up to 330,000 from Casino Korona in Slovenia, according to Ananova. Local police suspect that they used giant vacuum cleaners to suck the cash from slot machines when the casino was closed. The entire cleaning staff has been sacked.

Cop shoots to fame


A police ofcer is suing the US Government after his weapons d e m o n st ra t i o n backfired. Lee Paige, 45, was holding a Glock .40 handgun and telling his audience of Florida s c h o o l children that he was the only one in the r o o m professional enough to hold the weapon when he accidentally shot
WWW.OUT-LAW.COM

Homersexual lawsuit
Muscovite Igor Smykov plans to ask the European Court of Human Rights to ban The Simpsons from Russian TV after his 6,000 claim was tossed by the Moscow City Court. Mr Smykov told Pravda that the hit show promotes drugs, violence and homosexuality and has fouled his sons vocabulary, for which he says he has punished his son several times.
THE SIMPSONS, SHOWING ON SKY ONE. THE SIMPSONSTM AND 2006 TWENTIETH CENTURY FOX FILM CORPORATION. ALL RIGHTS RESERVED.

A shoe bummer

himself in the foot. The scene was caught on video and Paige holds the Drug Enforcement Administration responsible for its release to the internet. Global circulation has made him the target of jokes, derision and ridicule, according to his lawsuit. He can no longer work undercover a n d is no longer permitted or able to give educational motivational

15

legal advice for technology businesses from out-law, part of international law firm pinsent masons www.out-law.com/compliance