In these uncertain economic times, technology businesses are
facing new challenges and new risks, protecting and valuing your
intangible assets becomes increasingly important.
In this edition, we look at the problem of data scraping which
affects many online businesses when information from the
company's website is systemically stolen and used to boost
competing businesses. We also look at stemming liability for
"consquential loss" in contracts and protecting your IP
rights abroad.
DMH Stallard's Technology
Group provides a complete range of intellectual property
protection services. We are recommended in the leading Legal
Directories Chambers and Partners and Legal 500
for our work in this area.
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Protect Your Business By Blocking Scraping
By Frank Jennings and John Yates
Almost all online businesses with a large online presence and
listings are targets of systematic data theft – commonly
known as scraping, Web harvesting or Web data extraction. During
these attacks scrapers systematically steal large amounts of
information from the company's web site, in clear breach of the
terms and conditions, and use it for example to boost a competing
business.
Data Scraping or Data Harvesting is theft of property from websites
and has been going on as long as companies have been publishing
data and images on the web. Today it is done on an industrial scale
as some entities believe that it is easier to steal data than to
create it. There dozens of commercially available packages that
offer tools and anonymity to Scrape.
A system called ASSASSIN, developed by Sentor, can detect and block
scraping and data theft around the clock, in real time. The
Assassin Anti Scraping system is an expert system that analyses
traffic and requests to websites in an unobtrusive way. By
analysing usages and traffic patterns it scores requests and
concludes whether they are made by human or web robots. It can
detect Scrapers using anonymous proxy services or large amounts of
open proxy servers to avoid detection. The system retains all
forensic data which gives the choice to apply blocks, warn off
scrapers or prosecute perpetrators. The Yell.com white paper on
ASSASSIN case study is available at http://www.sentor.se/en/ASSASSIN_case_study.pdf
Chasing the money...
By Frank Jennings
Most contracts are stuffed in a drawer after signature and only
see the light of day again when things go wrong, and technology
contracts are no different. At that point, everyone turns to the
liability clause to work out how much it will cost them.
It is common practice for technology suppliers to exclude liability
for "consequential losses" when negotiating contracts.
However, it can be difficult to quantify such losses and it is
important to get to grips with this, particularly in a recession
when more people are willing to litigate to secure (or prevent) a
payout.
Most businesses know that a total exclusion of liability is
probably not enforceable but that they might be able to limit their
liability. It is well established that a business may be entitled
to receive compensation for:
1. losses naturally resulting from the breach – often a
company will seek to limit rather than exclude these losses
2. losses as a probable result of the breach which were in the
contemplation of the parties at the time contract was made
Typically the second type of loss is considered to be consequential
loss but there have been several cases over the years which suggest
that matters are not simple. Despite excluding liability for
consequential loss in their contracts, companies have had to pay
damages in a variety of different situations:
- where a supplier installed a telephone system at a law firm and had not configured the supporting software correctly, the supplier was found liable for the additional cost incurred by the law firm as a result of a third party fraudulently routing international phone calls through the system
- where a ship owner's employee was accidentally killed by an employee of a port authority, the port authority was found liable for the ship owners' liability to the deceased's next of kin
- where a supplier contracted with a hotel chain for the hire of minibars and those minibars were found to be faulty, the supplier was required to pay damages to the hotel chain for loss of profit and removal and storage of the faulty minibars, as well as repaying the hire fee.
In addition, when contracting with consumers, if the term
"consequential loss" is used in an exclusion clause, that
clause will not be effective.
You should ensure you take care when drafting liability clauses,
particularly in the current economic climate where claims are more
likely to be brought and the clauses more likely to be tested.
Technology companies should undertake a review of their contracts
now to ensure they are sufficiently protected.
Keep your intellectual property safe in foreign markets
By Sarah Birkbeck
First published in Sussex Enterprise's Business Edge
magazine March 2009
There are many horror stories about copycat manufacturers stealing
designs of products ranging from microprocessors to carpet
patterns.
Although Chinese copies have hit the headlines in recent years,
authorities in many other countries don't pay much attention to
intellectual property either.
A survey by Chubb Commercial Insurance in the USA last year, found
that small companies were even more likely to suffer from losses of
intellectual property in foreign markets than the larger
corporations. So what can be done about this? How do you protect
yourself? Sarah Birkbeck, a partner specialising in IP and IT
litigation at the Gatwick office of law firm DMH Stallard, has
these suggestions for Sussex Enterprise member companies:
- Intellectual property (IP) is often the most valuable asset in a
business and the protection of it needs to feature in the
business's strategy.
- It is important at the start of any commercial relationship to make the other party aware of how seriously you take the protection of your IP.
- Do this by insisting that they sign your confidentiality or non-disclosure agreement right at the outset – if they won't do business on that basis be prepared to walk away.
- Don't just assume that registration costs will be prohibitive; there are options that can make it more attractive including community-wide protection of rights and multiple applications.
- If you do think your rights have been infringed take advice
early, quite often just getting the other party to "cease and
desist" can be a good first step and needn't cost a
fortune.
An important element of any action you take will be to show you have suffered or will suffer some economic loss. For that reason it's important to ensure your overseas markets are all actively managed. Budgets and forecasts, as well as actual revenues, are an essential part of quantifying that. The formal agreements with agents and distributors are also important in demonstrating your presence in the market. Don't forget that these agreements should also define what happens to your intellectual property when they terminate.
DMH Stallard Corporate Review 2008 and 2009
By Tim Aspinall
Please click here for a review of the Corporate
department's 2008 and 2009
Looking back on 2008 from the current perspective seems strange in
many ways. We saw continued growth for many clients, supported by
private equity funding. Acquisition programmes for many
continued.
Gatwick M&A activity was supported by new clients such as
Hillcrest Care Ltd and Valens Resources Plc, and established
clients like Friday Holdings, Park Holidays and Loewy. The success
of Gatwick is marked by sustained relationships with successful
acquisitive clients. Many of these clients are supported by Private
Equity investors.
The City team continued to flourish, with an increase in
international work, in various off-shore jurisdictions; India and
the Middle East remain strong markets. Despite the steep overall
decline in transactions on AIM/PLUS Markets, we advised on the
placing of shares for Newland Stockbrokers, and the IAF Group plc,
the de-listing of Mercury Group from AiM, various pre IPO fund
raisings, and an off-take.
As the public markets have declined, we have seen a corresponding
increase in private placing and offshore investment
opportunities.
Banking transactions have been reduced over the course of the year,
but our team have been kept busy with reviews and renegotiations of
facilities. We have also had to advise on covenant breaches, and
debt to equity swaps.
2009 and Beyond
Quality investment vehicles, for private investors will continue
to attract funds, preparing us for the re emergence of the public
markets. Despite the generally downbeat mood, well funded UK, and
overseas buyers, are in a strong position to buy or create
contractual/corporate joint ventures.
As trusted advisers to clients we expect to help identify
opportunistic acquisitions, assess investment/purchase offers, and
rationalise/reorganise their businesses.
This is a market which calls for an experienced team and a strong
network of professional contacts, to ensure deals can be
successfully competed at the optimum level.
"Sectors where we see opportunity for growth include
technology, biofuel, recycling and waste, waste to energy,
suppliers to mainstream energy/oil and gas businesses, and those
with public sector clients."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.