Competition Law
Microsoft settles 10 year competition fight with European Commission...
Microsoft and the European commission have ended 10 years of fighting with an agreement over Microsoft's alleged bundling of its Internet Explorer browser software with its Windows operating system. The Commission said that the bundling contravened European competition law as it was an abuse of the software giant's dominant position in the market for operating systems. Now, Microsoft is willing to offer users a choice between different web browsers when using Windows.
This was not the first fight between the two parties. In 2004, following a long investigation, the Commission fined Microsoft €497m for two competition law breaches. One was Microsoft withholding vital information about the Windows operating system from makers of server software, thereby gaining an unfair advantage over them for its own server software products. The other was that it unfairly bundled its Media Player software into Windows.
Contracts
Government announces plans for Consumer Advocate to instigate class actions...
The Government has announced plans to introduce a new Consumer Advocate that would have the power to take class actions on behalf of consumers. The Government is concerned that consumers are unwilling to take legal action themselves and hopes this new body will act as a deterrent to people who think they can ride roughshod all over consumers. The Advocate would also act as a champion for all consumers and provide them with advice.
Paul Gershlick, editor of www.Upload-IT.com (www.Upload-IT.com) and a Partner at Matthew Arnold & Baldwin LLP, questions the effectiveness of this new body. 'This country has enough quangos. It needs to cut the cost on spending on bureaucrats if it is to achieve the spending cuts needed to get public debt under control. This country has enough people championing consumer causes – from Which? through to the OFT and Trading Standards. There are also options in the commercial sector - there are plenty of law firms who are willing to collect consumers together to fight class actions. So why do we need yet another body paid for out of the public purse?'
Copyright and Database Rights
Software case highlights need to deal expressly with copyright ownership in contract if commissioner wants to own it – ICEL v Virrage, High Court...
ICEL and Virrage entered into an agreement regarding the development of infection control software for hospitals. One of Virrage's directors had also been a director with LIS, a company that had failed to supply software under another agreement with ICEL. The agreement between ICEL and LIS said that ownership of the software would pass to ICEL upon payment of the purchase price. The agreement between ICEL and Virrage did not explicitly cover copyright ownership, but said that the specification would be the same as in the LIS agreement. A dispute arose between ICEL and Virrage over the copyright ownership.
The High Court sided with Virrage, which was represented by Matthew Arnold & Baldwin LLP in the case. The court dismissed ICEL's arguments that in the absence of any express statements about copyright ownership, the background of the case would mean that ICEL was the intended owner. ICEL had argued that the intention of the parties was obvious so that no mention needed to be made about copyright being transferred. The judge said that any inferred right had to be the minimum required in the circumstances. Therefore, if a mere licence will suffice, there is no need to infer an assignment.
Paul Gershlick, editor of www.Upload-IT.com (www.Upload-IT.com) and a Partner at Matthew Arnold & Baldwin LLP, comments: 'Although the case does not make new law, it is a useful reminder of existing law. Many people think that they own the software that they have commissioned just because they paid for it. However, the software developer owns the software unless something clearly and expressly is agreed in the contract. It is therefore important to address the issue in the contract.'
Protection for Amazon's Kindle hacked...
The digital rights management software for Amazon's Kindle has been hacked. Kindle is a platform developed by Amazon for displaying e-books. The hack attack means that e-books stored on the reader can be transferred to other devices. DRM software is controversial. Rights holders see it as crucial to protecting their copyright material from illegal copying by users, whilst users find that it restricts them from the freedom to do what they want with content. The Kindle hack attack follows other recent DRM hacks, including the reverse engineering of Apple's DRM software for its iTunes service.
Data Protection/Privacy/Confidentiality
Information Commissioner wants powers to inspect organisations' use of data...
The Information Commissioner – the regulator in charge of enforcing data protection law in the UK - has called for powers to carry out spot checks on organisations to see if they are complying with the Data Protection Act. Currently, the Commissioner can only access premises with a warrant or with consent – but it would like the power to enter premises automatically. The ICO believes that it has had some success in catching wrong-doers but to enforce data protection laws effectively it needs to be able to catch organisations unawares. Aside from wanting better powers to access and detect breaches, the Commissioner has also been in the news recently for its push towards getting custodial sentences for people who supply or obtain data without the data controller's consent.
School admits to loss of laptop containing sensitive personal data of over 1,000 pupils and staff...
A school has admitted storing sensitive personal data of about 1,200 pupils and staff on an unencrypted laptop, which was subsequently stolen. The Information Commissioner's Office – the regulator in charge of enforcing data protection laws in the UK – has decided not to issue an enforcement notice for breaches of the Data Protection Act 1998 against Waseley Hills High School and Sixth Form Centre in Birmingham. The ICO was satisfied with the school's undertakings to increase security held on portable devices, use encryption where appropriate and train staff on data security issues.
Facebook criticised over new privacy settings...
Facebook – the social networking phenomenon – has come under fierce criticism for changing the way the privacy settings operate for users. It recently invited users to change their settings, even where they had already been selected. When users logged onto the site, they were encouraged to change their privacy settings to the default settings suggested by Facebook, which would involve all their data, information and photos being available for the world at large to see, rather than just their friends and networks. The data could include sensitive personal data under EU data protection laws (such as religious and sexual information). The information could also give identity thieves plenty of data to carry out their activities. The Electronic Frontier Foundation – a digital rights lobby group – has criticised the move as an attempt to push Facebook users into publicly sharing more information than ever before while reducing the control that they have over their personal data.
Government appoints first CCTV regulator...
The Government has appointed a CCTV regulator for the first time. It follows concerns raised by the House of Lords Constitution Committee that the huge rise in surveillance and data collection by public bodies was undermining long-held traditions of privacy and freedom in the British democracy. Andrew Rennison is the interim CCTV Regulator for up to 12 months until Parliament chooses a longer-term appointment. The Regulator will take up an advisory rather than interventionist role. He will advise the public and Government on issues surrounding use of CCTV in the public including the need for a regulatory framework to enable police and others to create safer neighbourhoods while properly protecting personal privacy. The Regulator will not be responsible for deciding on whether particular CCTVs are appropriately used.
Premier League boss caught in a brothel – but tabloids unable to reveal his identity because of creeping privacy laws...
A football Premier League manager has been caught virtually with his trousers down in morally questionable circumstances. However, The Sun newspaper (which broke the story) and other tabloids have been frightened to publish the name of the manager. Why? Because of the creeping privacy laws in this country.
After he was severely injured in the great storms of 1987, Gorden Kaye, the 'Allo 'Allo actor, was unable to stop the press intruding in his hospital ward and taking photos of his injuries. However, since the introduction of The Human Rights Act 1998, a creeping law of privacy has been developed by the courts. The 1998 Act gives people a right to have protection for their private lives even if they are famous, although this has to be balanced against the press's right to freedom of expression. Cases have gone each way with some people being protected and others not.
More recently, particularly with the case of Mosley v News Group Newspapers last year - when Max Mosley was able to claim record damages for breach of privacy because of The News of The World's reports of his German uniform styled orgy session – the courts have been taking a more pro-privacy line. For more on that story, click here: http://www.upload-it.com/editArticle.aspx?ID=2746 (http://tinyurl.com/yezd63a).
In the current case, The Sun alleges that when he drove up to the brothel the unnamed married boss – dressed in branded football training clothes still - smiled and shamelessly admitted that he knew it was a brothel. That would be no justification to naming him, though. At least, that was The Sun's concerns based on the current state of the law.
Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com (www.Upload-IT.com), comments: 'There should clearly be a right for people to be able to go about their everyday lives without being hounded in the way that Princess Diana was, even if they are celebrities. However, it is questionable whether famous married people taking no steps to hide their moral misdemeanours deserve that right. This was not something that went on behind closed doors and if the married manager was really that flippant about his antics, why should his privacy be maintained? There is clearly a distinction between what is in the public interest and what is interesting for the public. In a lot of cases, even celebrities should be entitled to a private life. However, in my opinion the dividing line between freedom of expression and protection of privacy is in the wrong place if someone who has chosen to be in the public eye conducts himself in public in a highly questionable fashion and the press is unable to report on the grounds of respect for his privacy.'
Domain Names
Google loses out to Groovle in domain name battle...
Google has lost in its battle to persuade the National Arbitration Forum that the domain name Groovle.com should be transferred to the search engine giant. It had been registered by 207 Media, which claimed that it had been used as a web site for two and a half years before Google complained.
The Internet Corporation for Assigned Names and Numbers, the body responsible for managing technical matters relating to the Internet's domain name system, established a quick and cheap domain name dispute resolution arbitration service in 2000 for dealing with disputes over '.com' domain names. The National Arbitration Forum is one of the bodies appointed by ICANN to hear the domain name disputes. To win a domain name from a registrant, the complainant must show that it has rights in a trade mark confusingly similar to the domain name, the domain name registrant had no rights in the name and registered and used it in bad faith.
In this particular case, Google failed to show that Google was confusingly similar to Groovle. This is only the second time out of 65 domain name disputes that Google has lost.
E-Commerce Laws
Wikipedia ordered to release IP address of suspected blackmailer – G and G v Wikimedia, High Court...
The publishers of Wikipedia – the user-generated online encyclopaedia – has been ordered by the High Court to reveal the details of a suspected blackmailer. The Wikimedia Foundation was happy to reveal the Internet Protocol address of the suspected poster, but only if the High Court obtained a court order requiring the disclosure. Accordingly, G – the businesswoman who was allegedly being blackmailed – asked for a court order and was granted one. Internet service providers can identify a particular connection accessing the Internet from a particular IP address. The case surrounds anonymous postings and letters sent to G, which she claims is part of a smear campaign because one of her companies is in dispute with the person she suspects of blackmailing her.
Freedom of Information
Information Tribunal says time spent redacting documents can't be calculated when deciding whether exempt from Freedom of Information request...
Under the Freedom of Information Act 2000, people anywhere around the world have the right to see information held by more than 100,000 UK public bodies about the way decisions are made and public money spent. There are certain exemptions under the Act – for example, there are exemptions from information being disclosed if that would infringe someone's commercial secrets or it would breach a duty of confidentiality. Public bodies can also refuse to disclose if their costs involved with providing that information are too high. The costs are based on a time rate, which differs depending on the body involved. The Information Tribunal has now ruled that time spent in redacting - or blanking out – parts of a document cannot be counted as part of that calculation.
In this particular case, South Yorkshire Police received a request for data on the recovery of illegal firearms. It said that it would have taken more than the 18 hours available to read and redact the two documents which contained the information. The Information Commissioner – the regulator in charge of freedom of information law – did not agree with that argument, and nor did the Information Tribunal. It said that the relevant regulation applied to the time spent in determining whether it held the relevant information requested, locating that information/document, retrieving that information/document and extracting that information from a document containing it. The time did not include going through and blanking out sensitive details. Therefore, if it took a long time going through the document to blank out data that should not be disclosed, that was irrelevant.
Gambling
Gambling Commission issues guidance on Gambling Act 2005...
The Gambling Commission - the Regulator in charge of enforcing gambling law in the UK – has created some guidance on the relatively recent legislation, the Gambling Act 2005. The Act came into force just over two years ago. The Act prohibits illegal lotteries, but genuine prize competitions and free prize draws are acceptable. The dividing line is not totally clear from the Act. One controversy over the interpretation has involved houses which have been sold through competitions over the Internet. They have been controversial because of doubts over whether the qualifying questions were tough enough, or whether those schemes were really an illegal lottery.
The Act says a lottery occurs where people have to pay to participate, prizes are awarded to scheme participants and the prizes are either awarded wholly by chance or the first part of the process is wholly by chance. As to whether something is a prize competition (and therefore acceptable), depends on whether something is wholly by chance or whether entrants are required to exercise skill, judgment or knowledge. The Act says it will not be treated as wholly by chance if either: the requirement cannot reasonably be expected to prevent a significant proportion of people who participate from getting a prize; or the requirement cannot reasonably be expected to prevent a significant proportion of people who wish to participate from doing so.
The Guidance says that in many cases whether the competition involves sufficient skill, judgment or knowledge is clear – for example a crossword puzzle. These are ok even if the successful entrants are then entered into a draw to find a winner. At the other extreme are questions that ask just one simple question, where the answer is so obvious or common known that the competition does not pass the hurdle. The guidance says that it is hard to say for sure where is the dividing line, but the more questions or clues or the more specialist knowledge, then the more likely it is not to be a lottery. However, interestingly, the Commission says that it does NOT think the requirement is met where the answer can be found easily on the Internet, is widely known by the public or appears in accompanying text or narrative.
The Commission said that the phrase 'significant proportion' is to be given its ordinary, natural meaning. It refused to give a suggested percentage and said a lot depended on the context of the particular case. The Commission is likely to be satisfied where organisers can produce evidence showing they have taken steps to estimate that the likely proportion of people eliminated will be significant. It has suggested the following non-exhaustive list of indicators:
- Whether there are sufficient plausible multiple choice answers, and 'joke' answers only being used when there are sufficient other alternatives.
- Whether the correct answer can be found near to the question.
- How many questions are asked.
- The type of format – for example, complex logic puzzles that are not simple.
- Higher prizes need greater skill or knowledge to deter people from entering than competitions with low prizes.
Interestingly, in the case of free prize draws, the Commission also stated that provision of someone's data to enter a draw would not generally amount to 'payment to enter', and this would therefore not make it illegal. There were some exceptions, though – for example if the data was intended to be sold to third parties. The Commission further added that product promotions – where free prize draws were added with the cost of the products – were not a problem as long as the promoter did not charge any more than it would otherwise have done for the underlying item.
Hardware
Intel's Single-chip Cloud Computer has 48 separate processing cores on single chip...
Intel has developed a prototype that has 48 separate processing cores on a single processing chip, called the Single-chip Cloud Computer. Each core could run a separate operating system such as Windows or Linux. This is quite an advance, because the most that can currently be held on a similar single chip is four separate processors.
IT and Internet Use
Press Complaints Commission extends to Internet-only publications...
The Press Complaints Commission - the newspaper industry's self-regulatory body – is extending its remit to Internet-only publications for the first time. Until now, online versions of printed magazines and newspapers fell within the PCC's remit. This development fills a gap. To be a part of PCC's regulatory system, a publication must be UK-based and would come within the PCC's remit if it had been in printed form.
Johnston Press starts charging for online news service...
Johnston Press – one of the UK's biggest newspaper businesses – has started to charge people to access the online content at six of its publications. It is asking users to pay £5 for a three-month subscription or direct users to buy the newspapers. It is the first regional newspaper to trial asking readers to pay for the news. The Financial Times has already been charging for access to its online content for a while, and Newscorp - which owns The Times and The Sun - has announced that it is going to follow the FT's lead. These developments come as the publishing industry tries to get to grips with pressures on its revenues from reduced sales of paid for newspapers and users' assumptions that they can get news for free online.
Meanwhile, Google has announced that newspaper publishers can now set a limit on the number of free news articles that people can read through Google. Google has made the concession following claims from some in the media industry that Google has been profiting from free online news pages. Under the First Click Free programme, publishers can prevent unrestricted access to subscription sites. If a user clicks on more than five articles within a certain time period, they would be taken to the publisher's payment or registration pages.
Jurisdiction
New rules to govern which country's laws apply come into force on 17 December...
Whenever contracting parties enter into some form of cross-border agreement, it is a good idea to agree which country's laws apply and where any disputes would be held. Since 1980, an understanding in the European Union called the Rome Convention has applied. However, for contracts entered into from 17 December 2009, a new set of rules are applying. The Rome I Regulation does not change things significantly and, crucially, it is still open to contracting parties to specify which governing law applies (with some exceptions, such as for consumer contracts).
Applicability of jurisdiction clause by reference needs to be absolutely clear if incorporated by reference to another contract – AEL v Socofi, High Court...
This case had complex facts and several parties involved, but the main players were AEL (a liner carrier between Africa and Europe), Socofi (a French fruit importer) and DAM (a fruit grower in Africa). In August 2007, Socofi and AEL agreed by exchange of letters that AEL would replace a third party who had previously been providing freight forwarding services. AEL's letter to Socofi said that it was prepared to offer transport services and this included maritime transport under the conditions of the existing contract between AEL and DAM. In reply, Socofi confirmed acceptance of the maritime transport service under the conditions of the contract between AEL and DAM. The AEL/DAM contract had provided for large disputes to be heard by the English High Court. When problems arose, AEL started a legal action against Socofi and DAM in the High Court. Socofi applied for a declaration that the High Court had no jurisdiction as the jurisdiction clause had not been properly incorporated into the AEL/Socofi contract.
The High Court agreed with Socofi's application and said the AEL/DAM jurisdiction clause had not been incorporated with AEL/Socofi. The matter depended on the intentions of the parties. However, the precedent cases showed that when looking at whether a jurisdiction clause had been incorporated and accepted, there was a crucial distinction. Where the clause purportedly being incorporated was contained within standard terms and conditions, the clause could be incorporated even where one party had not seen the terms and conditions; however, where it was contained within another contract, the rules were stricter and only those terms that were closely related to the parties' agreement would be incorporated by general words of incorporation. In this case, the primary purpose of the correspondence was to identify the services and cost and there were no express words dealing with incorporating the jurisdiction clause. Therefore, it was not incorporated.
Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com (www.Upload-IT.com), comments: 'This case provides two lessons. Firstly, be absolutely clear if you are referring to another contract and you want a particular clause to apply. More widely, though, be clear what you are signing up to and don't just refer to another contract; that other contract may contain all sorts of provisions, some of which may apply depending on the legal rules of what sort of document it is.'
Web site not liable for comments posted by users when it acted quickly in taking them down – Imran Karim v Newsquest Media, High Court...
Newsquest Media was not liable for defamatory comments posted on its web site following its article. Newsquest reported that a solicitor was barred from practising because of misuse of client funds. Some comments were then posted by users. Newsquest did not monitor the boards before the messages were published. Instead, it acted quickly in taking them down when it received comments about their alleged defamatory nature. Because of this course of action, the High Court agreed that Newsquest did not have any liability for the allegedly defamatory comments and could benefit from the defence under Regulation 19 of the Electronic Commerce (EC Directive) Regulations 2002. Regulation 19 says that where an 'information society service' consists of storage of information provided by a service recipient (ie a user), the service provider is not liable for that storage where the service either does not have knowledge of the unlawful activity or acts expeditiously to remove the information when it becomes aware of the unlawfulness and the service recipient was not acting on behalf of the service provider.
Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com (www.Upload-IT.com), comments: 'It may seem counter-intuitive, but this decision explains why it is the right thing not to moderate message boards but to take down comments immediately.'
Misleading Selling
Bloggers and other people using social media to boost products should be pulled up for unfair commercial practices, says European Commission...
Businesses that use blogs, social networking sites and other social media to boost their products without users realising should be pulled up for breaching the Unfair Commercial Practices Directive, so says the European Commission. The Commission is concerned that people may get a distorted view of a hotel if the hotel's representatives have posted comments about it themselves, or cosmetic products may be promoted by people who are not truly independent where bloggers are paid to boost the products' profile amongst the online community. Similarly, some web sites may seem to be independent price comparison sites, whereas in fact they are owned by a particular player in the market. These involve hidden commercial practices and the Commission wants them to stop. It has published guidance to give its views on the implementation and interpretation of the Directive, which seeks to stop misleading business practices.
More than 1,000 web sites supposedly selling cut-price designer goods closed by Metropolitan Police...
Over 1,200 web sites that claimed to sell cut-price designer goods have been closed by the Metropolitan Police. The sites advertised branded goods such as from Ugg, Tiffany and Links of London. However, consumers often received nothing or counterfeit goods and had their payment card details stolen. The Met worked with Nominet to identify the sites and said this was the biggest operation of its kind. The criminal gangs made millions of pounds from this fraud and were often based in Asia.
Patents
High Court gives wide interpretation to the meaning of employee compensation in patents legislation – Shanks v Unilever, High Court...
Under the Patents Act 1977, patents made by employees usually belong to their employer. However, where an invention which receives patent protection is of outstanding benefit to the employer, the employee should be awarded compensation if it is fair to do so. The compensation is such as to secure for the employee a fair share of the benefit that the employer would have derived or which the employer may reasonably be expected to derive from the patent. There are further words dealing with the amount that could reasonably have been expected to have been derived had it not been to a connected person (such as another group company).
There have been few cases brought by employees and decided by courts in respect of the right of employees to compensation under the patents legislation, but this is one of those rare cases. Here, Professor Shanks had been employed by Unilever and invented a patent. One Unilever company transferred the patent to another company in the same group of companies for £200. Ten years later, the second company started making a lot of royalties from licensing the patent. Professor Shanks claimed compensation, but an interim court hearing sought to decide the meaning of the provisions of the Act. Unilever argued that the meaning of the relevant section meant that the Professor was not actually entitled to compensation in light of the sale by Unilever to another company in its group. The High Court said that although that was the literal meaning of the words as used in the statute, that clearly could not have been what Parliament had intended when passing the law. It had clearly wanted to stop employee inventors from being circumvented by nominal sales within groups of companies, so the Court gave the widest interpretation of the words in the Act in order to fit the intended purpose.
Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com (www.Upload-IT.com), comments: 'This result was not a surprise, but more generally employers should be encouraged by how few cases have been brought by employees for compensation since the 1977 Act came into force. A more important issue for employers is to make sure that their employment contracts protect them sufficiently to ensure that they own the patents to inventions developed by their employees.'
Tax
Government consults on new landline tax to pay for roll-out of super-fast broadband...
The Government is consulting on draft legislation to implement its proposed landline tax, which it recently announced in the Pre-Budget Report. The aim is to charge £6 a year annually in arrears to the local loop owner, which will pass on the charge to retailers and in turn end up with users. It is to apply to telecoms and broadband lines, but the tax should only apply once if more than one service is obtained over the same loop (even if from different providers). The aim of the tax is to raise enough money to roll out super-fast broadband to 90% of the UK by 2017. Super-fast broadband would improve users' broadband experiences through higher bandwidths, a better balance between downloading and uploading speeds, and more reliable higher quality services, with speeds of 50 to 100 megabits per second or even more - enabling large content such as iPlayer programmes to be downloaded very quickly.
The Government is hoping to raise about £175m a year from this tax, which is due to start for the year commencing April 2010. Whether the tax will actually happen, though, depends on the outcome of this year's General Election. The Conservatives would like to scrap the tax if they win. They would prefer to see business get as far as it can, and only consider tax and public spending once market providers such as BT and Virgin Media have finished their commercial roll-outs.
The consultation is open for anyone to comment until 12 February 2010 and can be found here: http://www.hm-treasury.gov.uk/d/consult_landlineduty.pdf (www.hm-treasury.gov.uk/d/consult_landlineduty.pdf).
Trade Marks and Passing Off
eBay has to pay Louis Vuitton £1.5m for sale of Louis Vuitton products on its site...
eBay has been ordered by a French court to pay Louis Vuitton's owner £1.5m for failing to stop products being sold on the auction site. In 2008, LVMH obtained an injunction to prohibit the sale or purchase of any of their products on the auction site, whether they were genuine or counterfeit. Even though eBay has tried to stop LVMH's products being sold on its site, it has obviously not done enough to stop this as 1,000 products were still advertised on eBay's site since the injunction came into effect, the French court heard. Brand owners are largely concerned with stopping counterfeit products, but some also like to restrict the channels of sale to protect the products' aura (and therefore the profits) – a model known as selective distribution.
Hotel finds trade mark registration no longer allowed to stay...
Carlyle had a hotel in the US and registered a trade mark for it in the UK in 1999. Under EU trade mark law, a registered trade mark can be revoked if it has not been put to genuine use within the relevant territory for five years from the date of registration. In this case, Mascha applied to have Carlyle's registered trade mark revoked. There was evidence that some UK residents had stayed in the US hotel. In addition, there was an office in the UK that had the facility to book stays at the hotel, although there was no evidence that any stays had actually been booked through that office. The trade mark owner accepted that the hotel services were only ever provided in the US, but argued that there had been genuine use because advertising and marketing had taken place in the UK.
Mascha's application for revocation was granted. There was no evidence that Carlyle had conducted any marketing or advertising of the hotel and its facilities in the UK with the registered trade mark. It was therefore not necessary to go on to consider whether advertising and marketing were sufficient in themselves to amount to genuine use of the trade mark in the UK for services provided in another territory. The registered owner had failed to show genuine use of the mark in the UK, so the registration was revoked.
Sun comes from the East and West, so M-Tech loses parallel import case – Sun v M-Tech, High Court...
M-Tech was a parallel importer of Sun Microsystems' computer hardware products, meaning it bought products with Sun's registered trade marks on in one country and re-sold them in the UK at a profit. EU trade mark law states that trade mark owners (such as Sun) have the right to put their products on the market in the European Economic Area for the first time, but once they have offered them for sale in the EEA their trade mark rights in those products are 'exhausted' (or extinguished). This means that trade mark owners can stop parallel importing from outside of the EEA but not within it.
In this case, Sun accused M-Tech of buying Sun's products from China, Chile and the US and selling them in the UK without Sun's consent. It therefore sought summary judgment against M-Tech. M-Tech raised a number of arguments.
The High Court dismissed M-Tech's arguments and sided with Sun, awarding it summary judgment. It said M-Tech's arguments had no real prospect of succeeding at a full trial. The judge was satisfied that the goods were first put on the market outside of the EEA and M-Tech had not produced any evidence to support its suggestion that they had been subsequently imported into the EEA with Sun's consent.
M-Tech also raised another interesting legal argument, which was dismissed by the judge. It claimed that Sun's distribution agreements which protected its trade mark rights infringed EU competition law and were therefore prohibited as they carved up the market. Sun was prepared to accept that its agreements may have infringed EU competition law, but argued that there was no connection between any such breach and its ability to enforce its trade mark rights. The judge was willing to accept Sun's argument that the disappearance of any sort of secondary reseller market for Sun's equipment was not because of its network of illegal agreements. Therefore, in the judge's view, there was no real prospect of success between M-Tech's argument that Sun should not be able to enforce its trade mark rights on EU competition law grounds.
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