Wright, Johnston & Mackenzie Solicitors

Manufacturers take control of online sales

A shake up in European competition law is set to give manufacturers additional rights in determining how their goods are sold online. The regulation comes into force in June and will apply to sales of goods over the internet.

Under the regulation, manufacturers will be able to insist that parties who sell their goods online must also operate ‘brick and mortar’ shops.

Manufacturers will be able to exert control over the types of distribution systems distributors use and prevent other distributors from selling their products in an exclusive distribution area.

Manufacturers will also be able to impose certain criteria (e.g. specific quality standards) on distributors, and will be able prevent distributors from selling their goods to unauthorised distributors (with the manufacturer deciding who is to be an authorised distributor).

Importantly, the regulation also intends to place a ‘block exemption’ on agreements between manufacturers and distributors for contracts relating to the sale of products and services.

These contracts will not be subject to certain restrictions on competition, provided that they do not include price fixing measures or other “black-listed” restrictions, and on the provision that neither party has higher than a 30% share of the market. This essentially means that the manufacturer’s approved distributors can distribute the products on offer anywhere, for any price, and in any quantity.

There has been mixed feedback to the new rules, as some parties believe that manufacturers should have the right to determine how their products are sold, whilst others think that this will have a detrimental impact on online traders.

If you wish any further advice on the regulation, trading online or any aspect of EU competition law, please contact a member of the iTech team.

« Back to top

“Historic” day as ICANN launches non-Latin web addresses

In a historic move the Internet Corporation for Assigned Names and Numbers (ICANN) has unveiled a system allowing for full web addresses to be written completely in non-Latin characters.

The system means that for the first time, web addresses will be able to contain characters of different scripts, including Arabic, Chinese and Thai.

Previously, websites were able to use some non-Latin lettters in the main part of the URL, however the “country codes” had to be written in Latin script such as “.co.uk”.

Egypt, Saudi Arabia and the United Arab Emirates became the first countries to be able to use their own codes which can be written from left to right in traditional Arabic.  More than 20 other countries have already requested approval from ICANN for international domains.

Previously, countries such as China and Thailand had introduced ways to enable users to enter web addresses in their own language however, these systems were never internationally approved and did not work on all systems. 

Of the 1.6 billion users of the internet, more than half use languages with non-Latin based scripts.  It is anticipated that this change will give many people easier access to the internet and will encourage global intergration by enabling people to type fully in their native tongue.

This move is being seen by many as a momentous event. ICANN president Rod Beckstrom has described the change as “historic” while Egypt’s Communication and Information Technology Minister Tarek Kamal described it as a “milestone in internet history.”

« Back to top

Blog owners beware – you can be liable for user posts

The High Court in England has ruled that blog owners can be held liable for posts by third party, even if the blog owner is not personally involved in posting the content. 

Service providers in the UK – including blog owners – are as a general rule protected from liability for third party content which they store or pass on by the E Commerce Regulations. 

The Regulations set out that blog owners will not be liable for third party content provided they do not create or edit the content and delete the content if it is found to be illegal.

However, the High Court has interpreted the Regulations strictly and ruled that even fixing the spelling or grammar in a user post can lose the blog owner that protection. 

The case involved a post by John Gray on a blog run by Alex Hilton. In his post, Mr Gray alleged that political activist Johanna Kaschke was arrested under suspicion of being linked to a terrorist group. 

Mr Gray’s post was, in fact, incorrect and Ms Kaschke sued Mr Hilton for libel as the blog owner.

In his defence, Mr Hilton claimed that he did not edit or vet the third party posts to his blog and as such should benefit from the protection granted to service providers under the E Commerce Regulations.

Mr Hilton’s website contained certain sections over which he had no control – for example an automated section of “Recent Blogs” and “Recommended Blogs”. The High Court considered that these sections of the website were covered by the Regulations’ defence and as a result Mr Hilton should not be liable for their content.

The Court did, however, decide that where Mr Hilton himself had promoted a particular blog to the “Recommended Blogs” or even where he fixed the grammar or spelling on certain posts, he was not entitled to protection under the Regulations.  The judge considered that this kind of action went beyond mere storage and therefore the defence was not applicable. 

The ruling of the High Court is extremely important for blog owners - it appears that even editing the spelling in a post will now invalidate the defence under the Regulations. 

Blog owners should therefore ensure that they take great care when monitoring or editing posts on their blogs. Posts which appear especially controversial or possibly illegal should be deleted. Remember, advice on defamation (libel) is always available from WJM’s expert team.

« Back to top

Retailers cannot deduct delivery charges from consumer refunds

The European Court of Justice has ruled that consumers should not have to pay for the delivery of their goods, provided they return the goods within 7 days.

The Court stated that if consumers are returning the goods within seven days of their purchase, they are simply ‘withdrawing from the contract’ and so should not incur any additional costs.

The case was brought by a consumer rights group in Germany against retailer Henrich Heine and centred around a €4.95 (around £4.33) delivery charge. Henrich Heine deducted this delivery charge from refunds given to customers who returned their goods within 7 days. The consumer rights group said that this was illegal.

Selling by post and over the internet in the European Union is governed by the Distance Selling Directive. Under the Directive, a consumer can cancel a contract for any reason within 7 days without incurring any charges. The only charge which may be imposed on a consumer is the cost of returning the goods.

Henrich Heine tried to argue that German law allows retailers to deduct delivery costs when refunding customers. This cost was in addition to the charge incurred by consumers in returning the goods.

However, the European Court held that if German law did indeed allow for delivery costs to be decucted from refunds, then the law was wrong and should be changed.

The terms of the Distance Selling Directive are enforced in the UK through the Consumer Protection (Distance Selling) Regulations 2000.

In early 2010, the Office of Fair Trading (OFT) considered the issue of refunding delivery charges in the UK. In a very clear statement, the OFT set out that the cost of delivering goods must not be deducted from a refund to consumers, provided the consumer returned the goods within 7 days of delivery.

The judgement of the European Court in the Henrich Heine case and the OFT’s statement makes it clear that in the EU it is not possible to deduct delivery expenses when refunding a consumer.

If you wish any further advice in relation your obligations and rights when selling or purchasing goods in the UK and the EU, please contact a member of the iTech team.

« Back to top

High Court blows the whistle on copyright fixtures

The High Court in England has ruled that football fixture lists are protected by copyright law, meaning betting companies and newspapers will have to pay to publish lists of English and Scottish football fixtures.

The case was brought by the English Premier League and four other bodies (the Pursuers) who claimed that a number of companies - including pools and betting companies and internet giant Yahoo! – were breaching their intellectual property rights by using the fixture lists without their permission.

In particular, the Pursuers claimed that the fixture lists constituted a database and as such the copyright in this database should be protected under UK law.

To benefit from copyright protection in the UK, a database must be “original” – the creator of the database must have exercised some judgment, taste or discretion in selecting or arranging the contents of the database.

The defending companies argued that the fixture lists did not constitute an original work and believed that there had been no substantial investment of time by the Pursuers in obtaining, verifying or presenting the content of the fixture lists. They argued that the Pursuers were simply compiling information when drawing up the fixture lists.

In similar cases in 2004, the European Court of Justice ruled against protection of football fixture lists.

However, in this case, the High Court agreed with the Pursuers’ argument that the work which goes into scheduling matches was sufficient to justify protection under database copyright law.

The High Court Judge stated that “The process of preparing fixture lists involves very significant labour and skill in satisfying the multitude of often competing requirements of those involved”.

The type of skill involved, the Court identified, included preventing teams from the same city playing at home on the same day, the demands of television and keeping many dates free to allow for European and international competition.

If you wish any further advice on copyright or intellectual property rights in general, please contact a member of the iTech team.

« Back to top

eBay seller to face £50,000 fine for illegal bidding

An eBay seller who set up two user accounts so that he could place bids on his own items faces a fine of up to £50,000.

The accused, Paul Barrett, is charged with 10 breaches of the Business Protection from Misleading Marketing Regulations 2008 and the Consumer Protection from Unfair Trading Regulations 2008. Each offence carries a maximum fine of £5,000.

Barrett was initally investigated after a complaint from a buyer that he had advertised and sold a minibus on Ebay with false low mileage.  After further investigation by Trading Standards they discovered that Barrett had increased the price of dozens of items, including mobile phones, a cash register and a Mercedes car.

The practice is known as “shill bidding” and involves an individual setting up two different accounts – allowing the individual to place bids on items using the two accounts. 

Mr Barrett had also left positive feedback on his own eBay site, leading buyers to believe his reputation was better than it was.

The case follows a crack down by Trading Standards on fraud on the internet, and in particular on auction sites like eBay.

The case is due to be heard in late May and the iTech team will keep you updated with the outcome of the case.

« Back to top