Understand Your Rights. Solve Your Legal Problems
Technology has rapidly progressed over the years and now variety technological advancements are pinnacle to daily routines and communication. Where there are many positives aligned with these developments, there are also a selection of negative outcomes, one of those outcomes being online abuse.
The previous year saw many reports into cyberbullying, videoed attacks and online abuse; a rough insight to how frequent cyberbullying is:
The worrying case is that abuse has led to suicide attempts, severe emotional harm and has significant impact on individuals’ lives. Even more concerning is that there are no specific laws in the UK that makes cyberbullying illegal, which poses the question to whether or not existing legislation is enough; we wonder if more could be done and if legislation needs to adapt for this relatively new method of abuse?
Lawyer Monthly decided to approach a variety of legal experts on the matter to gain their opinions and thoughts on the matter; we asked our experts what more can be done to address this prevailing issue, can the ease of removing one’s identity online pose difficulties for prosecution and if cases involving suicide should be taken more seriously.
Nicholas Taylor, Head of Media at Healys
Cyberbullying has long been discussed by academics, politicians, charities and the media worldwide; however within the UK there is no legal definition or specific legislation to tackle the problem. Too often, cases have led to victims taking their own lives, yet courts can only use existing legislation via interpretation to prevent harassment or threatening behaviour online: Defamation Act 2013, Education Act 2011, Communication Act 2003 s127, Protection from Harassment Act 1997, Criminal Justice & Public Order Act 1994 s154 and the Malicious Communications Act 1988.
Clarity on what constitutes cyberbullying is urgently needed to allow for legislation to pass. However, there are concerns for creating a definition, as the advancement of new technologies is far more rapid than the speed at which laws change, meaning bullies can continue to torment unnoticed.
Comparing cyberbullying across jurisdictions, specifically in the US, it is clear the UK could be doing more. The First Lady-Elect has announced cyberbullying to be the major social issue which she hopes to address throughout her husband’s Presidential administration. This public announcement provides positive media attention which may act as a deterrent to the bullies. Furthermore, there have been continuous attempts to pass legislation, significantly after the death and suicide of Megan Meier in 2009 due to cyberbullying, nonetheless, proposals are being dismissed due to criticism of ‘over criminalisation’. However, with funding following the footsteps of US’s proposed $25 million research and education fund, more research could be conducted in the UK to address this issue moving forward.
Legislation alone will not reduce cyberbullying across the UK; preventative measures are far more effective. Social media sites such as Facebook and Instagram, and education within schools have a duty to protect children and vulnerable adults. Currently Facebook and Instagram do not specifically use the terminology ‘cyber bullying’ within their Terms of Use or Community Guidelines. Children must be at least 13 to hold accounts; this is often ignored with numerous research findings showing younger children having accounts across social media sites. Sites need to take more ownership by acknowledging and implementing the term cyberbullying within their policies.
Perhaps the best prevention method is education. Children, teachers and parents should engage in developing and understanding internet safety, signals for abuse, and communication when being abused. If today’s society sees children as young as 5 with the latest smart phone, then lessons within schools relating to internet safety and social media should commence far earlier within primary schools, during PSHE. Moreover, lack of understanding can no longer be accepted, parents and teachers need to understand the latest apps and sites in order to protect the young. Ignorance is no longer bliss. Far too often the consequences of the victims are life changing and irreversible; suicide of a young child.
A framework of legislative and non-legislative provisions is needed within the UK. Currently legislation either needs amending or new legislation passed to make this crime illegal. Education needs improving and developing to reach younger children and parents, creating greater public awareness of this crime.
Phil Gorski, Solicitor at Blacks Solicitors
Does more need to be done?
It is very difficult to answer ‘no’ to this question given that the targets of cyberbullying are primarily children. The effects can be severe, they can shape someone’s future development and physical boundaries are irrelevant; what is more, cyberbullying, like bullying in general, can become self-perpetuating – a quarter of people who are bullied go on to bully others themselves.
What could be done to address this issue?
From a legal point of view, the temptation is to say that problems can be solved by existing laws being altered or new laws being introduced, but cyberbullying is a multifaceted phenomenon and can range from the unpleasant and transitory to persistent and extremely threatening. Few would suggest that the former should be criminalised and the latter is likely to be covered by laws that already exist. Raising awareness of the issue and how it can be dealt with by children, parents, carers and schools continues to be vital.
What should be done if it results in suicide?
Unfortunately, it is rare that the tragedy of a person taking their own life in these circumstances results in the identification of a single person or group in relation to whom blame can be placed or charges brought. The causes behind such a decision are likely to be extremely complex. The hope is that the actions of those very brave parents who publicise what happened to their child goes a long way to raising awareness and helps reduce the likelihood of other children feeling that they are in the same position.
Abigail Hudson, Barrister at St John’s Buildings
The advancement and accessibility of new technology means we have never been more connected. While more and more of us have become accustomed to the world of social media and have reaped the benefits of it, the emergence of cyberbullying and online abuse is an issue that cannot be ignored in an increasingly tech-oriented society.
A key difficulty for those trying to police the issue is that there simply isn’t the structure in place to deal with cyberbullying as a standalone offense. Many online abuse cases rely on the ‘tacking on’ of cyberbullying to other, perhaps more serious crimes and, while much of what is said online can be covered by existing legislation such as the Malicious Communications Act (1998) or the Communications Act (2003), prosecution is often reliant on fitting the charge into the parameters of other offenses, such as stalking and threatening to cause violence.
There also exists the issue of anonymity. Tracing unknown posters on Facebook, for instance, would rely on getting the company involved. Unless the abuse has resulted in some sort of horrific incident, such as suicide, the cost and time required involved is so prohibitive that police are unlikely to follow up on it. This is especially relevant if the only likely result is a slap on the wrist, which in most cases, it is.
There is, then, an argument for a tailor-made law. Specialist legislation akin to the Cyberbullying Prevention Act in America, which criminalises usage of the internet to harass someone, poses a potential answer. This too, however, is not without its drawbacks.
A cyberbullying law would have to encompass a broad range of offenses, with each case becoming the responsibility of the Crown Prosecution Service to make a judgement on what constitutes abuse and what is merely freedom of expression. That is a difficult line to draw and an even tougher one to enforce consistently. Such an approach puts the defendant at the mercy of the individual handling the case, who may rely on their own benchmark for what constitutes abuse.
Realistically, there needs to be greater investment in education. Teaching children the effects of engaging in this kind of behaviour removes the need to create two victims by escalating cases to the courts.
While the need to crack down on abusive behaviour online is likely to become increasingly prevalent as more and more of us delve into the world of social media, we must ensure that prosecution is done the right way. It is important that we don’t criminalise an entire generation of kids for doing what kids have always done.
Software was traditionally constructed from scratch, however nowadays requirements have gotten a lot more complex; the evolution of software has now resulted in software modularity and developers’ jobs now mostly involve assembling components from a variety of sources, including many components that are freely available on the internet. This ‘open source’ software enables developers to build on the work of others, they can tweak components and integrate it with other software to produce a specific product. According to Forrester Research, open source now comprises as much as 90% of a new application’s code. It’s a valuable resource, enabling software developers to build applications more affordably and bring them to market quickly.
Of course, those open source components usually come with a licence that defines what rights you have; those licenses also contain obligations involved which developers do not always consider.
How does this relate to the M&A world? Well, Phil Odence explains to us that when a company is buying another company where a lot of the value is tied up in software, lawyers want to ensure that intellectual property rights are clear and that the software isn’t burdened with licence infringements or full of cybersecurity vulnerabilities.
Phil is the Vice President and General Manager of Black Duck’s On Demand Audit Division; he works with M&A and technology lawyers to help them locate what open source code has been used where, and to identify any risks they should know about.
How has open source (OS) software use changed the due diligence process for lawyers?
Using OS is great for software development productivity. But the trouble is many companies use it without being fully aware of the licence agreements that come with it or the need to continually review it for cybersecurity vulnerabilities. Most acquirers today want to make sure they know what really is in the target’s code, in advance, before the close of the transaction. So an open source code audit and risk assessment has become an important part of the technical due diligence process.
Have you heard of any cases where potential problems were noticed a little too late? What was the effect of that?
The best example is Cisco acquiring Linksys ten years ago. Soon after spending half a billion dollars, they were served with a law suit for an open source licence violation, resulting in bad press, lawyers’ fees and, ultimately, an out of court settlement. Although the terms were not public, it is likely they were required to pay the plaintiff, put an open source management programme in place, and disclose all of the proprietors’ software to the public. This is probably the worst case scenario.
In what sort of M&A deals might it be important to look out for where the company (being acquired) has used OS and so make scanning for it an important component of the due diligence process?
Any time when software assets are significant to the company’s value. When software is a company’s primary asset, it’s vital to know what open source is being used, where it is being used, and of any license or security risks.
How frequently is open source software used by companies? Is use growing?
In today’s world where agile software development is key, OS software is used very frequently. Analysing recent audits for clients, Black Duck took a set of 200 software applications and found almost all of those applications used OS. Indeed, we find OS in 98% of the applications we audit. Ten years ago, software consisting of 10% or less OS was normal, but today, open source now comprises as much as 90% of a new application’s code.
Organisations must employ automated processes to gain visibility into what OS components developers are using – manual processes seldom are efficient. For example, when we ask the code owner for a list of OS being used, we only receive a response 50% of the time, because in most cases they just don’t know. In cases where we do get a list, on average, that list only reveals half of the OS code we eventually discover in the audit.
To what extent are lawyers already familiar and informed about this and considering it in due diligence?
Most technology and commercial lawyers have some familiarity with OS license compliance risk; however, even in the large international law firms, there are only usually a handful of lawyers that have the unique expertise required. M&A lawyers who are involved in all aspects of the deals will bring their expert colleagues into deals where software is an important part of the transaction.
Do you know if this knowledge of open source varies from country to country?
Anywhere where technology development is prevalent, such as in the UK and Germany, the knowledge of open source and its legal baggage is well-known. I would say the way in which the US differs from Europe is that in Europe companies are more reliant on legal mechanisms rather than specialists like Black Duck to perform the checks and factually define exactly how things are. I am not sure why that is, as there has been more litigation around open source in Europe, so I would expect more scrutiny in Europe in the future.
What issues arise from open source software and the due diligence process and how can companies overcome the issues presented?
Both companies in a deal are typically unaware of the type and extent of OS code within the target company’s software assets. Black Duck helps establish that use for both sides. When you know what OS is being used, and where, you can then assess the potential risks and move to address them.
Issues that arise include legal issues in relation to the licence (which is the main driver behind companies coming to Black Duck for an audit), operational issues and risks, and security issues. Legal risks concern the use of OS beyond the rights granted in the licence or not meeting the obligations stated within the license. For example, almost every licence states you must provide attribution for to the person that created it. Operational risks involve assessing the code’s quality, whether some components might make the code base more expensive to maintain, and so forth.
A big area of risk in OS use is one of cybersecurity. About two thirds of the OS components we look at have known security vulnerabilities. Acquirers want to know about these and any that could be a real threat. For example, is there a risk that sensitive information like designs or customer data might have been exposed?
There are two fundamental approaches to resolving these issues: technical solutions and business solutions. A technical solution can mean meeting the licence obligation, asking the copyright owner for permission to rewrite components, for example. From a business level, perhaps the valuation and terms of the deal are amended. Often there is a cash holdback to be used in case a lawsuit arises, or if there are problems within the first year. Sometimes deals are just delayed and transactions are put on hold whilst the issues are resolved; some companies prefer to resolve issues before transfer of ownership, some are comfortable resolving things after the transaction.
Do some issues arise more than others?
Security vulnerabilities in software are a big issue. More than 80% of all cyber attacks target software applications. With the majority of code in those applications now being OS, it’s vital to know what’s in use, where it is in the codebase, and to secure it against known vulnerabilities. In almost every audit we conduct we discover vulnerabilities, some of which were published publically years ago. Some vulnerabilities are so infamous they’ve earned names. Heartbleed, Dirty Cow, and Drown are just three of some 6000 vulnerabilities published since the start of 2014. Companies need to get better at tracking what open source components they use, where they’re using it, and ensuring those components are kept up-to-date and patched.
Do you see this changing in five or ten years when people become more aware?
I would say that companies are already getting better in time with their software management. In the future I think that companies will get better at knowing what is in their software and managing those risks. Beyond audits, a primary Black Duck business is providing tools for companies to help manage those risks for themselves.
Could the due diligence process be more extensive – more effective for lawyers to ensure the process is cleaner and quicker?
If companies were to get better at managing their OS, then they’d have fewer issues and need less help from lawyers. At the moment, I’d say that M&A lawyers do need to talk to their technical colleagues and consider 3rd party audit services to gain true insight into OS use and to establish what risks might be hidden within.
On 26th June 2015, the Fourth European Anti-Money Laundering Directive (EU 2015/849) (the Directive) came into force. Member States will have until 26th June 2017 to implement the Directive into national law. The Directive replaces the Third Anti-Money Laundering Directive (2005/60/EC), which was implemented in the UK by way of the Money Laundering Regulations 2007 (SI 2007/2157). The Directive aims to prevent the European Union’s financial system from being used for tax evasion, terrorist financing and money laundering. In light of the anti-money laundering directive kicking in, Lawyer Monthly hears from Tom Orange, a Solicitor at Byrne and Partners LLP, who outlines everything you need to know about the new rules and how to prepare your business for compliance.
The new Directive follows concerns that the Third Directive did not do enough to achieve consistency across Member States. It takes into account the 40 new recommendations adopted by the Financial Action Task Force (FATF) in February 2012, extending the scope of the current framework and strengthening obligations in several areas.
On 5th July 2016, in response to terror attacks in Europe in 2015 and 2016, and the leak of the Panama Papers, the European Commission published proposals to amend the Directive, with the goal of further strengthening measures against the financing of terrorism and improving the transparency of financial transactions and corporate entities.
This article considers the changes introduced in the Directive in light of the July proposals, the likely impact and the challenges that will be faced by financial institutions.
What are the changes?
Ultimate Beneficial Owners (UBOs)
The Panama Papers revealed the extent to which complex ownership structures are used to hide tax obligations and links to organised crime. The Directive sets out the framework for establishing the beneficial ownership of companies as well as the collection, maintaining and provision of this information.
Further clarification is provided in relation to ownership of companies and trusts. The previous threshold for beneficial ownership remains the same; a shareholding of 25% plus one share or an ownership interest of more than 25%. The July proposal reduces this to 10% with respect to non-financial entities which are considered high risk.
If there is any doubt, the Directive then defines a UBO as a person exercising control over the management of the entity through other means. If it is still unclear who the beneficial owner is, the Directive states that the UBO will be the person(s) holding the position of a senior managing official.
Additional obligations are introduced through the necessity for companies to maintain and make available “adequate, accurate and current” records on who their beneficial owners are to competent authorities, organisations and individuals who can demonstrate a “legitimate interest”. It remains unclear how this will be interpreted by each Member State, but it seems likely that this provision to increase transparency will be accompanied by significant administrative hurdles.
The July proposal extends this right, allowing public access to certain essential beneficial ownership information. This proposal has the potential to cause a great deal of concern with regard to privacy and data protection.
This provision has already been partially implemented in the UK through the introduction of the register of people with significant control (the ‘PSC register’). From 30th June 2016, companies have been required to declare who owns or controls them to Companies House when issuing their annual confirmation statement. The PSC register is designed to ensure that the ultimate owners or controllers of companies are identified and their interests made public in order to deter and impose sanctions on those who hide their interests.
Senior management responsibilities
Although the Directive advises that senior management need not be a member of the board of directors, it indicates in strong terms that this would be a wise idea given the knowledge required. Senior management will need to have “sufficient knowledge of the institution’s money laundering and terrorist financing risk exposure and sufficient seniority to take decisions affecting its risk exposure”, and will be responsible for approving the policies, controls and procedures put in place.
Increased Sanctions
The Directive favours the stick over the carrot, deterring continued breaches by increasing the level of sanctions available. For serious, repeated, systematic (or a combination thereof) breaches, obliged entities face penalties that include naming and shaming, withdrawal of authorisation (where appropriate) and penalties of up to 10% of the annual turnover in the preceding year. In the case of a subsidiary, this is the turnover of the parent company in the preceding year. Individuals face fines of up to €5,000,000 or twice the benefit of the breach.
Simplified Due Diligence (SDD)
The Third Directive enabled Member States to exempt certain entities from Customer Due Diligence (CDD) where there was a low risk of money laundering or terrorist financing. The Fourth Directive enables obliged entities to adapt their measures to low risk situations.
Before applying these simplified measures, the obliged entity must be certain that the business relationship or transaction presents a lower degree risk, as set out in Appendix II. This approach should allow regulated entities to focus their resources on transactions that pose higher risks, such as those involving third countries with ineffective anti-money laundering systems or high levels of corruption.
Enhanced Due Diligence (EDD)
EDD is now required when transacting with entities in high-risk countries. When assessing risks, obliged entities are required to consider the factors detailed in Annex II which include potentially higher-risk situations.
Politically Exposed Persons (PEP)
Foreign PEPs are already considered higher risk. The Directive extends this to domestic PEPs and expands the category to include members of the governing bodies of political parties.
Obliged entities will be required to have appropriate measures in place to determine whether the customer or UBO of the customer is a PEP. If the transaction involves a PEP, senior management approval is required in order to continue or maintain the business relationship. In addition, EDD will continue to be applied for 18 months after the PEP leaves their position. This has been increased from 12 months.
As this change slightly shifts the boundaries, businesses will need to revisit their procedures for identifying and dealing with domestic PEPs before reviewing relationships with existing customers and updating their lists, as EDD may well apply.
Virtual Currencies
Virtual currencies, such as Bitcoin, represent a relatively small market. The European Central Bank reported in 2015 that they do not pose a threat to financial stability due to their size – approximately 70,000 daily transactions worth around €40,000,000.
Though virtual currencies were initially not included in the scope of the Directive, the Commission has changed its view in the wake of the terrorist attacks in Paris. The Commission believes that there is a risk that virtual currencies could be used by terrorist organisations to circumvent checks and conceal transactions as they can be carried out anonymously.
Virtual currency exchange platforms, where virtual currencies can be exchanged for real currencies, and custodian wallet providers, holding virtual funds for customers, are to become obliged entities. This proposal aims to ensure better controls and enhanced due diligence for an unregulated sector, though to some extent virtual currencies already provide a strong digital footprint of transactions.
Pre paid cards
The Commission believes that the anonymous use of pre-paid cards presents a risk of terror financing. The proposal is to reduce the use of anonymous payments through these pre-paid cards by lowering the threshold for identification from €250 (£213) to €150 (£128). Tougher restrictions on their use will apply online.
Financial Intelligence Units (FIUs)
In order to aid the fight against terrorism financing, the Commission proposes new powers and resources for FIUs across the EU.
Member States are to set up centralised bank and payment account registers, allowing FIUs to quickly retrieve necessary information. The Commission has also clarified that FIUs are given a power in the Directive to request information concerning money laundering or terrorist financing from an obliged entity, even if a Suspicious Transaction Report has not been filed. Again, this raises several concerns about safeguards, data protection and conditions of access.
Conclusion
Although much of the aim of the Directive is focussed on preventing terrorism financing, the financial sector will take some collateral damage in the form of increased sanctions and due diligence requirements.
The Directive follows the legislative trend of a stronger compliance culture with a focus on top-down awareness and approval of procedures. It implements harsher requirements for both SDD and EDD and pushes greater responsibility on senior managers. The increased Sanctions further highlight the need to involve compliance teams and solicitors at an early stage in order to ensure that procedures and practices are up to date.
There are questions over how far the duty to provide information on the beneficial owners will extend, and to whom. It is almost inevitable that we will see several challenges to the provision of this information and of its use by investigating or prosecuting authorities.
Despite its inevitable departure from the EU, it seems likely that the UK will want to honour the Directive and maintain its international standing. Notwithstanding perhaps obvious pressures for the UK to attract foreign investment and reduce strain on UK businesses, the strong focus of the Directive on reporting and cooperation between Member States would be significantly undermined if one of the key players in its implementation were to introduce weaker controls. Similarly, it is also unthinkable that the EU would want the UK to withdraw from its obligations; the July proposal makes it quite clear that the effectiveness of achieving transparency and fighting terrorism financing can only be achieved through strong cross-border collaboration and robust, consistent standards.
CPA Global is the world’s leading Intellectual Property (IP) management and technology company; we have the pleasure this month to speak with their CEO Simon Webster about technology management solutions, the future of IP interlinked with technology, where businesses slip up when regarding their IP and how to stay on top of the globe’s rapid technological advancements.
Your leadership team come from a variety of backgrounds; what sort of backgrounds are they from and how does this help enhance your IP and technology management solutions?
When you are running a global IP management and technology company, you need a variety of skills; you need technical people to create the best solutions, but it is also important to have people that understand the challenges involved in protecting and prosecuting IP.
Toni Nijm, our CITO, for example, has been involved in software development for years but he is also a qualified patent attorney, giving him relevant skills for this role. Our VP of IP solutions, Jayne Durden, is a qualified solicitor that used to work in trademark clearance, so she understands the needs of customers in law firms and corporations. Our Director of Law Firms, Jean Hughes, is also a qualified solicitor and held General Counsel positons in various multinational corporations. This has provided Jean with a unique capability to help law firms better serve their clients.
To be a truly exceptional global company you need to have a diversity of opinions and cultures. You also need to have people that truly understand the issues customers face so they can create, promote and ultimately monetise better solutions to problems.
Many companies in the financial industry have historically been slow to innovate. With the FinTech sector now bringing more innovation to financial services, how will this impact established businesses in the sector?
There is currently a great deal of innovation in the financial technology sector. To name but a few: blockchain currency technology, crowdfunding, mobile payments and data analytics are all capable of disrupting the financial services market.
The issue is that certain standards need to be adopted across global markets to ensure that the industry grows in an ethical and effective way. Technology is neither good nor bad, but it can be used for good or bad purposes. So for every negative story about Bitcoin being used to fund illicit trade on the dark web, there is a small businessperson in a developing market that has had their life transformed positively by mobile payments. The development and deployment of global financial standards can help ensure innovation impacts the industry positively.
Large financial institutions are not always the best companies to create innovation – I should know, I used to work for one - and I think we will see more and more collaboration between large institutions and innovative start-ups with great ideas.
With open source software now being used to develop many products, are companies at greater risk of IP infringement?
The whole landscape of software protection has changed dramatically since the 2014 Alice v CLS Bank case which made it easier to challenge the validity of software patents. Many feared at the time that this ruling could negatively impact growth in the software industry, but this has largely not been the case.
Open source software is different to IP protected software. Commercial software is ‘compiled’ from a source code, which makes it difficult to modify and harder still to copy the original code. For this reason, most commercial software is compiled before being sold.
Open source software includes the original source code with the final software. Customisation of the software is encouraged. Open source software developers see the benefits of enabling anyone to change the source code – this can make the software useful for additional scenarios and may reduce software bugs. Creators of open source software offer an open licence to use the source code, so there is no issue around misuse of IP.
A more problematic area is joint collaboration between companies. Unless there is a clear agreement in advance as to how IP will be protected, companies can risk losing control of their intellectual property. This is particularly concerning for smaller businesses that are collaborating with larger brands as they may not have the legal muscle to fight a larger company.
How have services developed over the past few years to help aid law firms with their IP related matters?
Law firms face a far more challenging world. Filings are at an all-time high. Fluctuating policies in different territories, and new developments such as the European Union Unitary Patent add complexity.
In principle, filing for protection is relatively simple but protecting an idea globally increases the complexity. For an international filing there could be hundreds of people involved. Each person will communicate and invoice in different ways, creating an administrative nightmare. An agent network of experts will deal with local patent offices, alongside language professionals to interpret innovation, translate and apply it to relevant local jurisdictions. Filing a patent for global protection requires the expertise of several hundred people and comes at a price tag of many hundreds of thousands of dollars.
This is where technology can make a difference. The most advanced law firms are now deploying advanced IP management platforms to transform filing efficiencies, reduce risk of human error and free up lawyers to focus on providing strategic counsel.
Thinking ahead, what else do you think technology will be able to offer businesses and law firms in relation to their IP matters? Is there anything you wish to see, but is not yet achievable?
At our annual customer conference in Nashville last year I made the point that the IP industry has been poorly served by technology. Prior to arriving at CPA Global, I played my part in the UK Financial Services’ rapid technology-led revolution. That is a revolution that has yet to happen to IP.
This is ironic because IP has played a central role in the innovation industry for centuries and yet is probably the last major industry to fully benefit from the disruptive effects of technology. The IP industry has evolved from paper delivery, through fax to email, but processes are still too cumbersome and disjointed.
Today it is possible to get a wealth of insight from IP to shape future business growth, create compelling competitor insight and drive the next generation of research and development effectively. But to fully benefit from this opportunity, corporates and law firms need to have IP information in one place, seamlessly linked so that an amendment to a filing is reflected, for example, in the subsequent renewal. When this is possible, technology is no longer a different way to do the same tasks, but instead a facilitator of new ways to generate business benefit. This is the objective behind The IP Platform™, CPA Global’s new technology to fundamentally change how technology supports IP professionals.
As CEO, how do you ensure your team stays at the top of their game at being the world’s leading IP management and technology company?
You do not have to love technology, but you must love the transformation that technology can bring to your customer. There is a quote that I like from Jeff Bezos of Amazon: “If you’re competitor-focused, you must wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.” I believe this is a great way to look at running a business.
Technology is essentially a tool that enables you to create something better for the customer. My objective is to lead a company that is not a technology company per se, but one that uses technology to delight the customer.
What that means for our people is understanding more about what IP specialists, law firms and large corporations need and building solutions that deliver.
Are there any common misconceptions that firms or businesses have in relation to their IP and patents?
Yes. For me one issue is what I describe as the “democratisation of ideas”. Decades ago, before digital disruption, people worked in silos; ideas were created by engineers and products were sold by sales people.
Today anyone can create and execute ideas. Think about some of the fastest growing brands in the world: Uber, WhatsApp, Spotify – these started as ideas about how travel, communication and music could be delivered in a more effective way and each have disrupted large industries. Today you do not need to be an engineer or software developer – all you need is an idea and the right people to help you execute quickly and globally.
For IP professionals, this is an amazing opportunity to grow the importance of their role – because protecting ideas quickly is more critical than ever. But to fully benefit from this opportunity we need to ensure IP is as fast paced as the rest of the business. My perception is that many entrepreneurs still see the IP industry as slow and difficult. This must change if we are to ensure that IP is central to the new digital and globalised economy.
Declaring its independence in 1991, Ukraine had a fresh slate determining their legal sector and legislation for its citizens. Oleg Fedotov, Managing Partner of one of the first law firms in Ukraine with international slant post-independence. He speaks on personal injury, the challenges he faces and the way in which the legal sector still needs to develop in Ukraine.
You are based in Ukraine and are a board member of Pan European Organisation of Personal Injury Lawyers Birmingham, England; how has this membership helped the way in which you practice law?
Our firm was established in 1999, not so many years after gaining independence and when Ukrainian people started having opportunity to travel and work abroad, and thus needing legal support if something went wrong.
We were one of the first to deal with not only personal injury (PI) cases in national jurisdiction, but to promote justice for our citizens on an international level, where we were mainly involved in maritime fatal injury accidents.
Then, our membership in PEOPIL not only gave wealth of new knowledge and innovative approaches to what we were already doing, but connected us with many PI lawyers worldwide, launching a new era in the history of our firm on an international level. We became actively engaged on behalf of Ukrainian citizens and also in international RTA, aviation, product liability, holiday accidents, medical malpractice cases, which is not common practice in Ukraine, opposed to developed European countries.
It is in this sense, and in many others, that PEOPIL is invaluable for its member-lawyers for when harm “crosses the borders”.
In regards to the above, can you comment on an alternative country that is ahead of its game, in relation to personal injury law? What aspects do you think Ukraine’s legislation could adopt?
Comparing Ukrainian legislation with that of other countries one should bear in mind that it is relatively young, including personal injury laws. Compensation for non-pecuniary damages was first introduced in 1993 in Ukrainian law and there is still no uniform approach by local courts to its application. The main feature of personal injury law is still, with few exceptions, reflection of general principles on compensation of damages, without specification on each type of personal injury, which is more the case with EU states legislation. Thus, there is a lot yet to adopt from developed European countries and EU legislation in general. European integration of Ukraine, being under way, will inevitably contribute to this process.
What are the most complicated cases you are given? What challenges do you face?
The most complicated cases are those with foreign element. Ukrainian courts are reluctant to apply foreign law in cases where there is a strong indication of this and more inclined to apply lex fori principles, which is not always to the benefit of victims or their survivors.
Maritime fatal or severe injury accident cases prove very challenging. Such a case may start from Ukraine in terms of negotiations, then proceed judicially in Greece, security measures (ship arrest) may be taken in Romania; when it comes to enforcement of the judgement, and a Russian insurer is involved refusing to pay under LOI issued for release of the ship in Romania, you have to initiate enforcement proceedings in Russia, whereas the said vessel may have been arrested by the claimants for the second time in Bangladesh, on the same claim against the new ship owner, where the court decides that it will hear the case against the latter on the merits.
Are there any new positive tendencies in your field of legal industry on international level?
Many international lawyers realise that personal injury can become a global issue and there is a strong tendency of personal injury lawyers from different countries to unite their efforts, which founded the first multinational group of international claimant counsel - this is really great!
Is there anything you would like to add?
I would like to thank personally Wolfgang Resch, Antoinette Collignon and all PEOPIL members for the great work they are doing to develop personal injury law on a global level.
Special thanks to our friends and best collaborating lawyers Silina Pavlakis and Christos Moschos, who have been standing up for the rights of Ukrainian citizens in Greek jurisdiction, recovering compensation beyond clients' expectation.
With her bilateral experience, Aleksandra Kowalik expands on her article from the previous month; Lawyer Monthly’s January edition saw Aleksandra discussing the history of the European Arrest Warrant (EAW) and where she thinks improvements could be made. This month, she expands on this, but discusses the similarities between the UK and Poland and the weakness of Polish democracy; she explains how the Polish democracy contradicts itself by recognising regulations regarding bail conditions as a depravation of liberty in the UK, despite the fact that Polish domestic rules treat the same conditions as equal to imprisonment.
Having an opportunity to assist Clients (Requested Persons) in both jurisdictions (British and Polish) in terms of European Arrest Warrant proceedings, the issue of the requesting state sentence reduction due to the bail (electronic tag) period in The United Kingdom appears frequently, especially in relation to the 8216/1/08 REV 1 COPEN 70 EJN 26 EUROJUST 31- Final version of the European handbook on how to issue a European Arrest Warrant; this determines the proportionality principle to be implied when deciding if EAW should be issued.
Consequently, the matter of a legal definition and approach towards the feature of the bail condition, namely the electronic curfew imposed by a requested state, is essential for the requesting state in terms of a possibility to withdraw EAW; this is applicable in cases of the tag period being covered in at least half of the imposed imprisonment sentences, or the temporary detention order (issued in a non- conviction EAWs).
The ground for a further discussion is a judgment of a European Court (Fourth Chamber) issued on 28th July 2016 (case ref no.: C‑294/16 PPU). The case has proceeded upon the request for a preliminary ruling under Article 267 TFEU from the District Court in Łodz - Srodmiescie (Poland); it was made by decision of 24 May 2016, received at the Court on 25 May 2016, in the proceedings JZ versus the District Prosecution Service in Lodz - Srodmiescie.
Respectfully to the extract of the judgment, the above-mentioned request for a preliminary ruling concerns the interpretation of Article 26(1) of Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States (OJ 2002 L 190, p. 1), as amended by Council Framework Decision 2009/299/JHA of 26 February 2009 (OJ 2009 L 81, p. 24) (‘Framework Decision 2002/584’).
The request has been made in proceedings between JZ (Requested Person) and the Prosecutor for the District of Lodz- Poland; the request by JZ concerned the deduction from the total period of the custodial sentence imposed on him in Poland, during which he was made subject, by the Member State which executed the European Arrest Warrant, namely in the UK to the electronic monitoring of his place of residence, in conjunction with a curfew.
The discussed and currently leading judgment is essential, as Polish Judicial Authority always dismisses applications for a sentence reduction based upon the period of the electronic tag during the EAW proceedings.
In case of any change of the Polish authorities’ approach, the EAW withdrawal would be admissible what could appear extremely helpful in relation to minor offences.
The merits of a raised issues in terms of the request to the Court were as follows:
Article 26, which is in Chapter 3 of Framework Decision 2002/584 and is entitled ‘Deduction of the period of detention served in the executing Member State’, states:
Relevant Polish law raised in terms of the request:
Article 63(1) of the Polish Criminal Code of 6 June 1997 with further amendments, provides that periods of de facto deprivation of liberty are to be deducted from the sentence, rounded up to a full day, with one day of de facto deprivation of liberty being equal to one day of deprivation of liberty, and two days of restriction of liberty to two day-fines. For the purposes of Article 63(1), a day means a period of 24 hours calculated from the time of the de facto deprivation of liberty.
Under Article 607f of the Code of Criminal Procedure of 6 June 1997 with the further amendments, which implies article 26(1) of Framework Decision 2002/584 into Polish law, the periods of de facto deprivation of liberty served in the Member State executing the arrest warrant for the purpose of the surrender, are to be deducted from the sentence which has been handed down or is being served.
A brief draft of the set facts:
On 18 June 2014, JZ (Requested Person) was arrested in the United Kingdom under the certified European Arrest Warrant, and has stayed detained until 19th June 2014 when on 25th June 2015 has been released on bail upon a decision of a WMC designated judge.
The bail conditions were as follows:
Those conditions have stayed applied until 14 May 2015 when RP has been brought to the Polish justice.
Polish Judicial Authority reduced RP’s sentence taking into account only his stay in custody.
The case is an example of the approach and interpretation of the article 26- chapter 3 of Framework Decision 2002/584 and the “detention” definition.
The Court concluded in para 21 that in the light of recital 12 of Framework Decision 2002/584 and article 6 TEU, Article 26(1) of that Framework Decision must be interpreted in the light of Article 5 of ECHR referring one’s right to liberty and security. Consequently, the professionals must or should at least raise an issue to be discussed and decided if the electronic tag, an obligation to stay at the specified address, reporting to the police station and the absolute prohibition for switching off their mobile, should not be considered as a limitation or deprivation of liberty.
The above-mentioned approach could be confirmed by the Polish regulations namely Executive Criminal Code, in particular article 43b which defines the electronic monitoring itself. It must be strongly highlighted that the electronic tag is a sort of separate punishment regulated by the Polish Criminal Code. Additionally, in case of imposing the imprisonment sentence up to maximum one year convicted/ defendant, can lodge an application for the imprisonment sentence conversion into the electronic monitoring supervision.
The standard conditions of that sort of a punishment is staying at the prescribed place at the prescribed time (art 43b para 3.1 Executive Criminal Code) within the limited distance.
It seems the general requirements and features of the Polish electronic monitoring are the same as the bail conditions usually imposed in The United Kingdom.
What is more astonishing, the Polish legislator counts one day of the electronic monitoring as equal to one day of a detention, therefore the two- limb approach of the Polish authorities to the same legal factors seems to create some kind of a schizophrenic and unreasonable legal reality.
Consequently, taking into account the outcome of the judgment pointed in para 57 clearly stating that “the answer to the question referred is that Article 26(1) of Framework Decision 2002/584 must be interpreted as meaning that measures such as a nine-hour night-time curfew, in conjunction with the monitoring of the person concerned by means of an electronic tag, an obligation to report to a police station at fixed times on a daily basis or several times a week, and a ban on applying for foreign travel documents, does not, in principle, have regard towards the type, duration, effects and manner of implementation of all those measures; it is restrictive as to give rise to a deprivation of liberty comparable to that arising from imprisonment and thus to be classified as ‘detention’ within the meaning of that provision, which it is nevertheless for the referring court to ascertain”. In my point of view this has no legal ground in order to be considered as a justified statement.
The rule of law has been established to provide the stabilisation and certainty among the societies instead of an unlimited and wild rule of nature; the hypocrisy implemented into legal approach and interpretation to the same legal issues simply fails to comply with the rule of law certifying the weakness of a democracy in a country.
Peter Cohen, Strategic Director of Countercept at MWR InfoSecurity, is involved with setting up, detecting and responding to targeted cyber-attacks across critical national infrastructure across the UK.
His experiences with service in the legal industry, have largely been positive. He states there’s a lot of good people in the security teams at law firms who are living through a change where cyber-security is moving in the right direction. He speaks with us today on the protocols law firms should take when protecting their data, where to allocate their budgets and why cyber security insurance should be re-thought.
Do you believe any legislation needs to be developed to ensure justice is served post cyber-attack?
Interesting question! I think legislation is a difficult one as it is already in place to ensure that criminal proceedings can be dealt with appropriately, so I would say the only way around this is with effective attribution of cyber-attacks. Attribution is one of the hardest things to be completely accurate with as it’s a grey area and you’re always looking at multi-jurisdictional cases, particularly when law firms have been targeted by criminal breaches from overseas. When attribution is effective and it’s done accurately, and the criminals responsible are based in the same jurisdiction as their victim, then existing legislation is sufficient. What is difficult, however, is that attribution.
A reason why law firms tend to be attacked is because they tend to be quite exposed. What do you think can be done to ensure this isn’t used to help the hackers?
That’s another good point. The problem with security is that attackers won’t go directly for those assets. They’ll go for people instead. If you hide the assets, it’s not going to affect the first stage of an attack.
Anyone at a law firm: a lawyer, a paralegal a secretary, support staff, or even IT, will be the person who is breached and an attacker will then utilise their credentials to facilitate the rest of the attack. If you hide assets, you’re making it harder for the people in the organisation to do their job and you create security through obscurity, but at the same token, making the ease of doing business harder for the sake of security, so hiding assets doesn’t really work.
What firms should be doing is ensuring they can quickly detect user compromise. So if you understand that your users and the user accounts are going to be breached and will be utilised to get the assets, you can detect that attack and nip it in the bud before any assets are compromised.
What is the best protocol?
To effectively detect rapid user compromise, you need some kind of advanced endpoint protection, an agent which can detect any kind of anonymous behaviours, anything out of the ordinary happening on that user’s machine which may be indicative of an attacker action.
Where do you think law firms lag when it comes to security?
Another interesting point as I’d say the last 9-12 months have seen a bit of a change in attitudes towards security - not from the security teams in law firms as they have always had a passion to ensure that they’re as secure as they can be - but in the partners and the budget holders, because security expenditure does come out of their end of year bonus. We’ve seen a far more pragmatic approach as they are willing to allocate the necessary resources to bring law firms up to more in line with the rest of industry. We are seeing more momentum within the industry to make sure that they aren’t the weakest link and not the softest underbelly within and the first place attackers would go to, but there is still room for improvement.
Do you think smaller law firms are under more threat?
Smaller law firms face a different threat to larger firms. Typically, a smaller firm would hold less motivation to the more advanced criminal groups – particularly those groups that are motivated by data related to mergers and acquisition deals. Smaller firms typically, will not hold data that will give an advanced threat the requisite reservation to target. So, from our perspective – do their defences need to be as high as a larger firm who is involved in multi-national M&A deals? No they don’t. However, smaller firms do hold more motivation for less advanced criminal groups who might be utilising ransomware or commodity malware with a view to extract some quick ransom money from a firm. A smaller law firm is less likely to have the controls in place to block that activity or that ransomware but are also less likely to have the IT process in place to recover from the ransomware attack without paying the ransom. At the moment, smaller law firms are being targeted by those threat attackers lower down the food chain but they are being targeted more frequently than the larger firms who are ignored by those less capable attackers.
Do companies and firms tend to incorrectly pinpoint the motivation behind the hackers attack?
Like I said before, attribution is seriously hard but having said that, it depends on post breach and what data has been stolen. From there, you can start to piece together what the motivation behind the attack would have been. What we should really do is flip that and understand the key is to have a grasp on the motivations related to different data assets before a breach. Understand who, which groups, which nations/states, which hacker groups, would have a motivation to access this kind of data and understand the capability of those groups and how they operate and the techs they might use. We ought to look at the own systems and controls and see if there’s a mismatch between the attacker and the controls and infrastructure you have surrounding that data. If there is, you’ll need to make a risk calculation to determine whether you’re protecting that data appropriately or not.
How difficult would you say it is to gain that information? How long should it take to figure out motivations?
In short, the answer is 1-2 weeks. Worst case scenario is that you could go on for 6 months and never get to the bottom of it. After an attack, it depends on the complexity. If it’s just one or two compromised users and one data set has been stolen or lifted, then it’s quite straightforward to determine the extent of the breach; attributing it to a specific criminal group or nation depends a lot on the infrastructure and tools used to perform the breach. If they are commodity pieces of malware that have been bought on criminal forum by a known criminal group using infrastructure that has been known the security industry before, it’s quite straightforward and be attributed quite quickly, however that’s not usually the case. You can’t usually say with 100% certainty who it was, particularly with a targeted attack.
An attack with specific infrastructure or specific attack sectors or new malware to target a law firm wouldn’t have been seen before because it would have been newly designed . From this, you can only really make assumptions to who performed the breach. That being said, if you follow the trace back through the rabbit hole far enough, you can start to improve your chance of working out where the attack has come from.
A prediction for cyber security is increased regulations, what do you think this poses for companies or law firms?
Regulations do not equate to security, they typically equate to compliance. A series of requirements a firm has to meet in order to be able to bid for any piece of work or meet a certain standard that’s important to them or the industry. Those tend to require certain technologies to be procured and put in place but actually, if we look at it from a security perspective they don’t cover the attack paths at all that an attacker would look to exploit. With more regulation, comes more “stuff” that a firm has to do which will lead to a false sense of security, particularly by the business owners. They’ll see that they’ve spent a whole load of money on things which allow them to be compliant and potentially bid for more work, but have done nothing to improve their security posture. It will create a challenge for security teams in law firms as they may be forced to spend the budget that they have on compliance and regulations rather than actually defending the business.
What would you suggest be done or changed?
The first thing to do is to ensure the business owners are up to speed and understand the threat profile of the firm based on the data which it keeps, the clients which it keeps, the markets in which it operates and the geographies in which its present. That threat profile, if understood by the business owners and partners, should, if properly understood, trigger the appropriate level of budget to secure that firm.
In a lot of firms, that’s already been done and so the next thing to look out for would be the budget allocation. We’ve talked about regulatory compliance and how that doesn’t equate to security and so perhaps it falls under a different pot of budget; it should be spent on effective detection and response. This will enable a rapid response to user compromise and ensure targeted attacks can be detected and stopped.
Firms should perhaps move away from the more preventative traditional controls that have been put in place which are being bypassed by targeted attackers, such as next-gen firewalls and anti-virus products (anything securing the perimeter), and instead be able to respond to a user compromise.
Leading on from that point, John McCathy said that his predictions of cyber security is that the anti-virus paradigm will be seen as dead. Can you comment on the effect of this on firms and companies?
He’s completely correct, antivirus is dead in regards to targeted attacks. We can say that with 100% confidence because we see it every week. If a law firm or any other firm is targeted and someone has a specific motivation to breach that, then malware will be used that doesn’t carry a signature and would bypass antivirus. The effect that this has on security for law firms, is that they need to understand that this shift has taken place and if they are likely to be targeted they need to put in additional security controls. If they’re not likely to be targeted because they don’t carry the requisite information with the requisite motivation to cause a targeted attack, the more traditional security controls are likely to be okay. If anything they carry is of value, they need to change the focus of where they’re spending security budget.
Do you think it’s essential that law firms invest in insurance?
The short answer is no. The reason for that is because cyber security insurance kicks in after you’ve been breached and it basically pays for the appropriate incident response: clearing up and stating what has happened. The biggest thing a law firm has is its reputation and that’s one of its most valuable assets. Cyber security insurance will not in any way, help a law firm maintain its reputation. It might pay for a PR agency to put a spin on it post-breach, but it won’t actually stop the breach. A law firm in particular, is far better of spending its money on actual security, something to make it safer, rather than an insurance policy to clear up, as its main asset will still be hit.
Not obtaining the right level of protection for your unique business can lead companies into a bundle of mess; trademarks and copyrights are implemented to ensure this is avoided, but what happens when your company wants to expand internationally? Will your registered IP be recognised in overseas markets? Lorna Brazell, Partner in the Intellectual Property Department at Osborne Clarke, answers these questions for us, as well as expanding on what IP can do for businesses wanting to expand internationally.
What are the overall benefits of implementing an IP strategy for the purposes of expanding business by region?
A business planning geographical expansion needs to think ahead and develop an IP strategy for its target markets before it actually begins to trade. If the IP in the product's design, technology or branding is not protected, someone will copy the product or business model, leaving the originator facing an uphill battle to gain or maintain market share.
Repeatedly, European businesses have launched in a foreign market only to discover a nimble local competitor already trading using the same or very similar name, or copying key products. Businesses frequently feel taken advantage of – but actually this is just competition in action. There is no right to have all markets reserved to you just in case you eventually decide to launch there. If there is consumer demand in country X, and the originator has not launched there and has no IP protection, why shouldn't a local business fill that gap?
What are the particular IP considerations for businesses to make when planning expansion into international trade?
Many businesses fail to recognise that the IP they register in their home country – a UK trade mark, for instance - gives no protection in overseas markets. With the exception of EU trade marks and designs, covering all 28 Member States, registered IP rights are national, requiring registration in each country needing protection.
Fortunately, IP law is fairly harmonised globally. IP has been critical in encouraging international trade in technology and consumer products. After all, what enables a manufacturer based in one country to persuade customers in another to buy its products, but the ability to demonstrate that the product is more desirable than a local version? Unless purely price-driven, that competitive advantage must come either from aspects of the product itself – superior functionality, or design – or reputation. These are precisely the advantages that IP can protect; without IP, markets would be awash with copycat products of variable quality, making brand reputation virtually impossible to maintain.
To ensure fairness across different jurisdictions, the World Trade Organisation's rules include an entire Agreement on Trade-Related Aspects of Intellectual Property, (the TRIPS Agreement). As a result, all WTO members have implemented a common set of principles. These may get interpreted differently, so IP protection is not identical everywhere, but ensures businesses can expect some protection for their creative and inventive work. So, you can obtain and enforce IP almost anywhere, although the processes and remedies available will vary.
But deciding what rights register in which country needs to be approached strategically. Filing trade marks worldwide is expensive and obtaining global patent rights even more so. Businesses also need to be aware that registering the right is only the first step – these rights last only as long as they are renewed, giving rise to renewal fees that can mount up. So, businesses need to be selective. Smaller businesses, in particular, need to identify precisely the rights they will need to protect the core aspects of their business in a new territory and which they are prepared to enforce, since these are private rights and only in limited cases will public assistance be available.
Establishing an appropriate brand is key to succeeding in a new region. This may be a simple case of registering the existing brand as a trade mark in the relevant local registries but before doing so, the business also needs to assess how effective the original brand will be by considering the new region's language and culture. Things can go horribly wrong. A famous example was a car branded Nova – a word associated by English speakers with novelty, or the dynamism of an exploding star, but to Spanish speakers simply meaning "does not go". Where the local language does not use the Roman alphabet more re-engineering of the brand may be needed. The word which sounds closest to an English name may have an undesirable slang meaning, or be the name of a pre-existing local business. Alternatively, a product may have acquired its own name locally, which may be difficult to uproot. Pfizer ignored the local name Chinese consumers had given its Viagra product, “Wei Ge”, meaning “Mighty Brother”, instead preferring a different Chinese transliteration, only to find nobody used it. These are not insurmountable issues, but time and costs can be saved by anticipating them at the planning stage.
What sectors are more facilitated to expand via the use of IP and why?
Consumer-focussed businesses stand or fall with their brand recognition rather than the specifics of the product itself. To expand, they invariably need trade marks, although protecting the products themselves through designs and patents can also help maintain distinctiveness in the market. Other sectors, such as pharmaceuticals or electronic devices, depend on maintaining exclusivity over their technology. This is where patent rights protecting their technology become fundamental to a successful expansion. Creative industries and the software industry rely upon copyrights to prevent free-riding on their work.
Commodity products, conversely, are less likely to benefit substantially from IP rights and may sell purely on price and service standards.
What are the benefits of franchising and when is this option the best solution to expanding internationally?
Franchising is an excellent way to harness local knowledge – how business cultures work and what appeals to local consumers – to transfer a product or business model successfully from one jurisdiction to another. This is particularly true where cultural differences are obvious, but also applies where the barriers are essentially linguistic.
Although it is no longer surprising to find familiar brands in almost any country, it is not yet the case that 'one size fits all' such that the local market's response to a brand arriving from overseas mirrors exactly that of consumers in the home country. In some cases, there may be unanticipated advantages, as when KFC successfully out-competed McDonald's in China. KFC hired local management who understood that KFC had an immediate advantage because Chinese consumers prefer pork and chicken over beef. Menus were also customised to appeal to local tastes and KFC’s predominately-red colour range presented a cultural advantage, symbolizing good fortune and joy. In contrast, IKEA struggled in China: its value marketing was out of synch with the Asian markets' view of Western products as aspirational; its traditional large suburb-based stores struggled because Chinese consumers mainly use public transport. Furthermore, its catalogue was used by competitors to copy products.
As well as understanding practical issues, local franchisees will be able to advise how much recognition the brand already has in the market – helping to avoid mistakes such as applying to cancel or revoke a bad faith registration of the same or similar trade mark without providing enough evidence of the mark being “well-known” in the particular territory.
However, getting a local franchisee to commit to building up the brand long-term may require patience; the franchisor should expect to offer its licensees marketing and funding support to do so.
How can businesses be better educated on the implementation of IP strategies in order to effectively expand their operations, abroad or domestically?
As the examples above show, businesses need to understand which rights they actually need. Although commonly bundled together as ‘IP’, there are a range of rights with different uses which protect different assets.
Patents concern the technology: a business developing new technology should be thinking of patenting their results and where they will need it over the next 20 years, since patents globally must be filed when the technology is still new.
Design is about the look of the resulting product, rather than how it actually works, and is increasingly important in consumer products as consumers become more sophisticated.
Trade marks are about the reputation of a business and how its customers see and recognise it. Almost every business should have a trade mark but, unlike patents, there is no need for global registration at the outset - it can be done when the business intends to launch in a given territory.
There is a lot of information available online; in addition to commercial sources such as law firms, the UK Intellectual Property Office website (https://www.gov.uk/government/organisations/intellectual-property-office) is helpful, for instance. But it is important to understand that the rights are national; reading the information relevant specifically to the target market is key. The first step to better understanding is asking the right questions!
With global trade expecting to slightly warm up in China, international corporations and executives are doing the right thing by considering and keeping up their trade with China in order to expand. We speak with Shanshan Xu, the Senior Partner of Hiways Law Firm, who reveals what you should do to avoid litigation cases during Chinese Customs, how international trade in China has developed and how mediation is beneficial during disputes with international organisations.
Since you began practising, how has international trade and its law changed in China over the years?
Since I began practising, the international trade and its law has always been developing dynamically. China plays more of an important role in the process of the globalisation and not only abides by WTO rules, but also actively promotes the bilateral trade negotiation. Currently, the US has left the Trans Pacific Partnership (TPP), which provides the opportunity for China to enhance the cooperation with other TPP members and obtain the leader status in the globalisation.
During the process of the trade facilitation and deduction of the tariff and non-tariff barriers, China also pays attention to the duty income and national security interests. For example, in the respect of personal articles, the individuals who act as the purchasing agents and carry the goods from overseas to mainland China, the personal articles for taking advantage of the preferential tariff policies become the targets hit by Chinese Customs; while in the respect of the goods, the Customs enhanced the audit against the loyalty payment made by the importers to the exporters in the auto industry.
How can companies avoid litigation against them in regards to smuggling and customs? If these cases do arise, what would you recommend the company’s first step be?
My suggestions on the customs compliance against the smuggling and customs are listed as follows:
In the daily operation of the business, the companies should not use the tax saving as a key performance indicator for the executives and staffs.
Provide the complete and true documents to the Customs for the customs declaration.
Don’t pass the uncertain/unknown information to the Customs, e.g. HTS code, price, and sensitive information.
Set up a compliance department independent of other departments in the companies.
Seek for the assistance of the professional experts, including but not limited to, the opinions in areas of the classification, valuation, certificate of origin, and trade process.
If these cases do arise, the companies should write down the list of the documents taken by the Customs, and the responsible Customs officials in charge of your case. Meanwhile, the companies should retain a professional attorney to conduct the self-examination and make timely and continuously communication with the Customs.
Has mediation become a more popular method of solving international trade, and why?
Yes, mediation has become a more popular method of solving international trade, due to mediation having many advantages compared to lawsuits, including but not limited to: cost saving, confidentiality, the high possibility of realisation of the comprehensive and maximum interests, the maintenance of the good relationship, and benefit for the further cooperation.
Unless mediation is forbidden by law for certain kind of cases, it works for most cases, especially the disputes occurred between the equal parties. More effective communication is conducted, higher possibility of resolving the disputes through mediation will be realised.
How difficult is it to mediate between a Chinese company and an internationally based company? What common misconceptions do international organisations have?
Generally, international organisations have the common misconception towards Chinese companies regarding the discredit and non-compliance with the rules. This misconception against Chinese companies greatly increases the difficulty in mediating between a Chinese company and an internationally based company. Moreover, the executives of the internationally based company may have made their judgement based on the wrong and incomplete information delivered by the staff, due a misunderstanding of the information delivered between one another.
Immigration has allowed the world to integrate and share talent across all jurisdictions, but more recently, the topic of immigration has been a negative one; it has caused concern for those who worry their jobs are being snatched away and that it is causing terror threats and attacks. The debate is never-ending, but the recent actions of US President Donald Trump and his controversial stance on immigration has spurred on discussions to whether or not current restrictions are admissible. We discuss with Andrea Elliott about the recent Executive Order issued by Trump, the effects of this on business immigration and what else could be done to tighten immigration legislation. Winners of the Relocate Magazine prestigious annual awards, Best HR Supplier Team of the year in 2015 and Immigration Team of the Year in 2016, Andrea and her team of passionate immigration experts, embrace the constant changes in the world of Immigration globally. Here are her thoughts on major trends in global immigration today.
How has migration shifted in Africa since you first began to practice? How do you see the continent’s progression shifting migration?
Migration into Africa has steadily increased. It was not a sought-after destination for years with APAC locations beating Africa out with cost and logistics infrastructure. As the migration of people to urban areas has increased, the need for industrial growth in areas such as mining, technology and infrastructure has kept pace. This growth has had the necessary outcome of a need for specialists; highly qualified individuals to establish, implement and develop a myriad of skill sets using a combination of the local workforce and expatriates. One of the key improvements we have seen, is the transformation of immigration, particularly in Southern Africa, as a vehicle to ensure knowledge transfer to the resident population. An excellent example of this is in both South Africa and in Ghana where a detailed Skills Transfer Plan is part of the work permit application process.
As you specialise in international immigration to and from many countries, can you comment on a certain country’s legislation which is ideal and should result in more countries being willing to adopt it for their nation’s benefit?
While European countries look for ways to close their doors and the United States argues about how many illegal immigrants to deport, Canada has always been an enlightened leader in the Americas for immigrants. A new “Express Entry system” greatly increases the weight given to offers of employment for people applying to become permanent residents.
For international practioners like myself, the gold standard has always been Singapore; it is a country that recognises that it needs to continue to attract talent and uses immigration as a positive beacon to attract skilled people to its small shores. Singapore has a very transparent immigration system, which makes it so attractive for business.
Recent changes to the law, while taking on the appearance of being protectionist in nature, have in fact codified and made clearer the occupations that the government deems necessary for Singapore to thrive. As is proudly stated by the Ministry of Manpower (fondly known as MOM): “Implementing fair employment practices makes good business sense. It is also the right thing to do in a workforce such as Singapore's, with its diverse ethnic, religious, age and gender makeup.”
Although it is not a widely appreciated fact, Germany has been one of the most popular business immigration destinations in the world for some time now. It offers a standard process and while the language barrier may be an impediment for some, from an immigration standpoint, it is progressive and accounts for the largest population of immigrants in Europe. According to the Federal Ministry of Labour and Social Affairs, the current ratio in the working population is that one in seven has a migrant background.
Migration into developed countries is somewhat more restrictive than before – an argument for the reasoning behind this, is due to excessive illegal immigration. The negativity from this, thus makes it harder for those wanting to work internationally. What do you think can be done to eradicate this negative stance, in order to make those who wish to work internationally fairer?
I would argue that illegal immigration and legal immigration do not compete with other.
Why? Legal immigration practice, from a business standpoint, is based on requiring a specialised knowledge or rare skill set whereas illegal immigration could have any number of drivers, be they economic, family or seeking refuge from a dangerous home country. It is too easy to lump the word ‘illegal’ next to the word ’immigration’.
The result is often an incorrect debate about immigration (legal and illegal) being demonised as a “bad thing” for the economy, or “it’s taking local jobs” when in fact, the types of positions being recruited for are most often, being responded by foreign applicants as there are not sufficient locally qualified applicants for the high level of skills required. For both economic and political reasons, the higher the skill level of prospective immigrants, the fewer restrictions governments tend to impose to entry.
To eradicate this negative stance or view of immigration, it is important to have an honest discourse about the benefits of legal, managed immigration. This topic is sadly dominated by politicians who use the word “immigration” as a football to bolster their own agenda.
In a 2016 Harvard Business Study , what we all know to be true was confirmed. Immigrants account for around a quarter of US entrepreneurs. Per the study findings, immigrants have a stronger will to succeed in business than “native born” Americans.
A fair discussion about the different types of migration of people, globally is the starting point. What is an immigrant versus an illegal immigrant?
Recognising that in our time, we are witnessing a human tragedy in Syria that is the cause of migration for safety from harm, also known as refugees: they are immigrants.
There are people who leave their struggling countries for brighter economic futures; some can enter wealthier countries without requiring a visa as in EU to EU nations: they are immigrants.
Yet others from countries in South America risk life and limb to cross deserts and rivers without visas to enter North America for better access to resources. Same facts, same circumstances, born in the wrong country: they are illegal immigrants.
There are those who leave their home country as a family member has moved to a new country based on family reunification principles; still others who can settle in a new country based on ancestry: they are immigrants.
And those who can afford to “buy” their new residence or passport of convenience: they are immigrants.
The field that we focus on, the corporate moves. People who move temporarily from their home to a foreign country and who are required to obtain a work permit prior to arrival: they are immigrants.
It is therefore very important to distinguish who we are talking about when we kick the immigration football around.
With developments (such as Brexit or Trump’s controversial policies) having the potential to transform immigration law, how do you see immigration law changing in the upcoming years?
In the USA, the immigration laws are now hailed as worthy of a Hail Mary “See you in Court” approach by our 45th President. The biggest challenge is dealing with the constant change and uncertainty of execution. An Executive Order is a high-level strategy, the coal face execution thereof by the thousands of people empowered to enforce it, is as different every time as the officers trying to interpret it.
At the time of writing, there have been no less than five Executive Orders that have impacted immigration and tarnished the halo immigration proudly worn in a country made of immigrants.
An example of an area of concern for those who specialise in business migration is a sentiment that the State Department, with a directive from #45, could slow visas with longer background checks.
What changes are you most apprehensive about?
In a recent article in Slate, I found this quotation from Mark Joseph Stern most descriptive of the changes that we are facing: “The very concept of due process emerged from a desire to limit the king's ability to order unlawful arrests. It appears we are returning to the days when the head of state can detain purported threats without a whiff of evidence that they have broken a law."
Is there anything else you would like to add?
It has been three weeks since U.S. President Donald Trump signed his Executive Order “Protecting the Nation From Foreign Terrorist Entry Into the United States.” While the media is replete with daily stories surrounding the controversial move, in reality not much of lasting significance has happened yet. While Pro-Link GLOBAL is concerned – as many are – with the Order’s impact on refugees and US visa holders, our writing on the topic focuses on our corporate clients and the potential impact on their global immigration needs.
Here is our quick status update on where we stand now, and what, if any, impact the events of the past three weeks are having on the global marketplace. For a detailed and balanced analysis of the 27th January Executive Order, see our widely-read Blog: “Trump Immigration Order: How It Does (and Doesn’t) Impact Global Corporate Mobility” here.
Status in the US - “SEE YOU IN COURT”
Without getting into all the intricacies of the numerous court challenges currently moving through the federal courts in various circuits and at multiple levels, here is a quick overview of where President Trump’s Executive Order on immigration stands in the US currently:
Everyone should bear in mind that the current status is temporary and susceptible to change with little notice, as the issues are still in play in the courts.
Going forward, indications are that the Trump administration is going to proceed with a two-pronged response. First, administration lawyers will pursue overturning the several court orders, enjoining portions of the current Executive Order, the most significant being that in the Ninth Circuit. While the matter will likely culminate in a Constitutional show-down at the Supreme Court at some point, Pro-Link GLOBAL believes the administration will first attempt to argue the merits of its case at the Circuit and District Courts before risking a permanent setback at the high court.
Second, the administration has indicated that it will issue an additional executive action next week as a possible “end-around” the courts. Much of the basis for the court decisions on the Executive Order was the wide scope and general language of the Order. Pro-Link GLOBAL believes that the new executive orders in the coming weeks will cover the same issues, but contain much more detailed language to “court-proof” the measures going forward. We expect such new orders to contain a more detailed factual case for suspending entry from the affected nations, a narrower scope carefully omitting foreign nationals already legally in the US, and greater procedural details on how case-by-case exceptions will be made, omitting any preference for religious minorities.
