Technology & Digital round-up – 12 November 2021

12th November 2021

Welcome to our latest round-up of legal and non-legal tech-related news stories. This edition covers the Supreme Court’s landmark decision in the Lloyd v Google mass data breach case, the government’s consultation on AI and IP, social media influencers, and much more. Get in touch with one of our experts below if you have any queries or need advice or assistance.

The legal part…

• In a welcome development for data controllers, the Supreme Court delivered its much-anticipated judgment in the Lloyd v Google mass data breach case. Google appealed a Court of Appeal decision giving the go-ahead for a representative action brought by Lloyd on his own behalf and that of an estimated class of 4.4 million Apple iPhone users. The compensation claim concerned damage allegedly suffered as a result of unlawful processing of their personal data in breach of the (old) Data Protection Act. Lloyd sought a uniform sum of damages for each individual, without having to investigate their individual circumstances. The Court of Appeal decided that a claimant could recover damages for mere loss of control of their data under the Act, without proving financial loss or distress. The Supreme Court unanimously reversed the decision, allowing Google’s appeal. It held that “damage” under the Act referred to material damage (such as financial loss) or mental distress distinct from, and caused by, unlawful processing – i.e. not to the unlawful processing itself. To recover compensation under the Act, it was also necessary to prove what unlawful processing occurred in relation to each individual. The case is also of interest in relation to UK class actions generally. See our briefing on the decision and its practical implications.

• In related news, the High Court dismissed a “speculative” claim for, among other things, damages for misuse of confidential information and breaches of data protection law and ordered the claimants to pay costs on the indemnity basis. The defendants had mistakenly emailed a demand for payment of school fees to the wrong recipient who promptly deleted the message. The court found that there was nothing especially personal about the information and it was a single breach that was quickly remedied. There was no credible case that distress or damage over a de minimis threshold would be proved.

• As part of its UK Innovation Strategy, the government is consulting until 7 January 2022 on how the copyright and patent system should deal with AI. With AI playing an increasing role in both technical innovation and artistic creativity, the government says that patents and copyright must provide the right incentives to AI development and innovation, while continuing to promote human creativity and innovation. The consultation follows on from an earlier call for views on AI and intellectual property and focuses on the following specific areas: copyright protection for computer-generated works without a human author; licensing or exceptions to copyright for text and data mining, which is often significant in AI use and development; and patent protection for AI-devised inventions.

• Ryan Doodson, Associate in our Commercial and Technology team, looked at the common questions and deliberations that every brand should consider in social media influencer partnerships, and offered his practical advice. You can read Ryan’s briefing here. In related news, companies are accused of using social media influencers to entice young people to try nicotine products – see this report.

• The Financial Conduct Authority’s Chief Data, Information and Intelligence Officer gave a speech on drivers of change in the financial services industry and how the FCA is responding. Among other things, she talked about how fraudsters and scammers are benefitting from new technologies and cited cryptocurrencies as an example. According to recent surveys, more than half of people investing in high risk products say that hype on social media and the news drove their decisions. Influencers on Youtube, Instagram and TikTok are having a growing impact on younger investors in particular.

• The trade union Prospect is calling for stronger regulation of the use of monitoring technology by employers after survey results suggested electronic monitoring of home workers by companies is rising sharply – see this news report. According to a related news story, a report by a group of MPs and peers says that monitoring of workers and setting performance targets through algorithms is damaging employees’ mental health and needs to be controlled by new legislation. The ICO recently consulted on updating its existing employment practices code, including practical new guidance on monitoring of workers.

• The European Commission adopted new rules to strengthen the cybersecurity of wireless devices and products available on the European market. They will cover devices such as mobile phones, tablets and other products capable of communicating over the internet; toys and childcare equipment such as baby monitors; as well as a range of wearable equipment such as smart watches or fitness trackers. Provided the European Council and Parliament do not raise any objections, the rules will come into force after a two-month scrutiny period. Manufacturers will then have a transition period of 30 months to start adapting relevant products and complying with the new legal requirements which are expected to apply as of mid-2024.

• It was reported that Yahoo has become the latest US tech company to end its presence in mainland China after the imposition of tougher regulations in the country. One of these is the Personal Information Protection Law which came into effect on 1 November 2021. The new law has many similarities to GDPR. Like GDPR, it has extra-territorial effect, which means it applies to processing outside China of personal information of individuals within China, including where the purpose is to provide products or services or to analyse and evaluate individuals’ activities. Such processors are required to establish a special agency or designate a representative within the territory. Among other things, there are strict requirements in relation to data localisation and cross-border transfers. Fines of up to 5% of annual turnover or RMB 50 million can be imposed for non-compliance. Affected companies should review their data flows and practices accordingly.

• We looked at issues surrounding defamation in today’s digital world and explained how our specialists can help.

…and in other news

• Walker Morris announced the launch of its dedicated Factory of the Future microsite, specially developed to provide advice and expertise that manufacturers need to leverage the benefits of smart technology and embrace robot revolutions. You can access the microsite here.

• UK Research and Innovation announced £50 million in funding for UK quantum industrial projects, including a green tech project to develop quantum technology to detect gas leaks – critical for the safe rollout of hydrogen as a widely used energy source in the domestic, industrial and transportation sectors. The announcement came as the UK and USA signed a new joint statement of intent to boost collaboration on quantum science and technologies.

• HM Treasury and the Bank of England published a statement setting out next steps on the exploration of a UK Central Bank Digital Currency. It would be a new form of digital money issued by the Bank of England for use by households and businesses and would exist alongside cash and bank deposits. A consultation will be launched in 2022.

• Tesla CEO Elon Musk carried out a Twitter poll asking whether he should sell 10% of his shares in the company in order to pay tax, with the share price falling after 58% of respondents answered “yes”. He has since sold $5 billion of shares, although the sale of about a fifth of those was made based on a pre-arranged trading plan.

• The government published its response to the International Trade Committee’s report on digital trade and data. It says that a key strategic priority is to expand the UK’s digital trade in the Asia Pacific region where technological innovation and the digital economy are growing rapidly. The Board of Trade aims to set out a digital trade strategy and recommendations before the end of the year. As new free trade agreements are concluded, the government will continue to publish materials that aid understanding of what has been agreed and its implications including, where relevant, on data protection issues and source code provisions.

• Facebook’s newly re-branded parent company Meta announced that, in the coming weeks, it will shut down the Face Recognition system on Facebook as part of a company-wide move to limit the use of facial recognition in its products.

• It was reported that New York’s next mayor wants to receive his first three paycheques in Bitcoin, as he signals his intention to make New York the “centre of the cryptocurrency industry”.

• Facebook whistleblower Frances Haugen has told MEPs that the EU’s future Digital Services Act can set the global standards in transparency, oversight and enforcement. See the press release.

• Amazon, Facebook, Google and eBay responded to a request by the Chair of the Treasury Committee to provide further information on the policies they have in place to combat economic crime, prevent fraud and protect consumers. Four more tech giants – Microsoft, Twitter, Snapchat and TikTok – have since also been asked for information on their policies. The Committee wants the government to include fraudulent advertisements within the scope of the Online Safety Bill. The draft Bill is currently undergoing pre-legislative scrutiny by a special joint committee which is due to report on its findings by 10 December 2021. The government recently responded to the House of Lords Communication Committee’s report on Freedom of Expression in the Digital Age, including in relation to the draft Bill.

• In related news, the Culture Secretary warned that tech bosses could face criminal cases over online harm, saying in her evidence to the joint committee: “I think my advice to people like Mark Zuckerberg, Nick Clegg and others who want to take off into the metaverse would be to stay in the real world. This Bill will be an Act very soon. It is the algorithms that do the harm. The Act will be there, and they will be accountable to the Act”.

• And finally, the chief executive of chip firm Arm warned that Christmas shoppers who have not already bought all their devices may not get them in time, describing the mismatch between supply and demand as “the most extreme” he has ever seen. See this news report.