Commercial Review – October 2013
Print newsletter08/10/2013

LinkedIn and Twitter: Whose account is it?
Social media makes it very easy for employees to create a network of individuals with […]
Social media makes it very easy for employees to create a network of individuals with whom they currently work and/or may work in the future. However, the border between the personal and the professional in this context can be a very blurred one, and the question of who owns the contacts on LinkedIn – or on Twitter – is one that is that is increasingly troubling the courts.
In the UK, under the Copyright and Rights in Databases Regulations 1997 (the 1997 Regulations), databases compiled by employees in the course of their duties are, by default, the property of the employer. The 1997 Regulations prohibit “extraction and reutilisation” without the consent of the owners. However, the data in social media accounts are held on a third-party server and require little or no investment from an employer to create, except perhaps indirectly through the use of the employee’s time. It is therefore questionable whether contacts on social media would satisfy the definition of a database for the purpose of the 1997 Regulations.
In a case from before the explosion of social media – PennWell Publishing (UK) Ltd v Ornstein [1] – the High Court held that a list of contacts created and maintained by a journalist on his employer’s email system belonged to the employer, although the court stated that if he had kept his personal contacts separate from his employer’s, then he would have been entitled to use them. This was followed by Hays v Ions [2] where the High Court found that an employer had reasonable grounds to bring a claim against a former employee who had used its database to create personal contacts in LinkedIn, although that case was somewhat exceptional as it concerned an alleged serious breach of trust.
More typical is the case concerning the political correspondent Laura Kuenssberg, who had built up a Twitter following of over 60,000 on her BBC account. The BBC had no written policy for who owned followers of a Twitter account and, as a result, Ms Kuenssberg was able to transfer the 60,000 followers across to her new ITV Twitter account when she transferred to ITV.
LinkedIn stipulates that the account is owned by the employee. This can present problems for employers. Many employees take their LinkedIn account with them when moving jobs. However, this summer, in Whitmar Publications v Gamage [3], the High Court showed itself prepared to grant an injunction to prevent a former employee from using LinkedIn to compete with his former employer.
The Whitmar case involved allegations of breach of duty against an employee, who it appeared was seeking to take confidential information (contained in the employer’s LinkedIn groups, which in turn was stored on his employer’s computer systems) for his own benefit to the detriment of his employer.
Practical tips for businesses
There will be more cases involving ownership of contacts on LinkedIn and Twitter. In the meantime businesses should:
- establish clear guidelines regarding the privacy and confidentiality of LinkedIn and Twitter networking information and ensure those guidelines are communicated to employees
- ensure that the guidelines make clear that the business retains the proprietary interest in all contact management software, including LinkedIn and Twitter
- ensure that the business retains control of all usernames and passwords for “branded accounts” in a similar way to email addresses.
- ensure that the business’ LinkedIn groups are held separately from personal LinkedIn accounts
- ensure that LinkedIn contacts are replicated elsewhere on the network
- incorporate a provision into contracts of employment whereby the employee assigns any proprietary interest in LinkedIn contacts to the employer or that they agree to close down their account when their employment ceases.
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[1] [2007] EWHC 1570
[2] [2008] EWHC 745 (Ch)
[3] [2013] EWHC 1881 (Ch)

OFT guidance on ongoing contracts with consumers
‘Ongoing contracts’ for the purposes of the guide are continuing contractual and other arrangements (often […]
‘Ongoing contracts’ for the purposes of the guide are continuing contractual and other arrangements (often long-term) between consumer and supplier which involve repeat or regular supplies of goods or services. Examples given include club/scheme membership subscriptions; insurance contracts; banking services and savings products; and supply of utilities.
The guide identifies a number of issues which tend to be regular problem areas in ongoing consumer contracts:
Provision of information
The provision of incorrect or misleading information or information that is insufficiently clearly or prominently displayed, will make it harder for consumers to make informed choices.
Cancellation
Terms that create tie-ins or restrictions on cancellation or switching, including terms that may provide for a minimum duration, high exit fees or long notice periods, may be particularly problematic. This will be especially true where the consumer has not been made sufficiently aware of the terms and conditions or insufficient information is provided to enable them to form an accurate assessment of whether or not they want to switch.
Rollover/renewal
The OFT state in the guide that automatic renewal – where a consumer signs up for a minimum contract term that is then automatically renewed unless the consumer expressly states that he or she does not want to renew – is potentially detrimental to consumers who may be prevented from switching. The problem is exacerbated by a failure to disclose automatic renewal terms; where it is combined with burdensome cancellation charges or terms; where the supplier fails to highlight that the subsequent tie-in period is on less favourable terms than the first or where the provision is used in the context of a free trial.
Variation
The OFT state that terms permitting variation, for example of price, may be a problem where the consumer has not adequately been made aware of the term or does not have a straightforward right to cancel. The use of such terms is particularly problematic where a variation to less favourable terms is permitted after a limited period or where the variation is not within the supplier’s control.
Toolkit
The guide also contains a summary of the applicable legislation governing consumer contracts and summarises key cases, both national and EU. Very usefully, it also looks at problems encountered in a wide range of specific sectors.
The guide can be accessed here. The OFT has been busy. After publication of the guide it launched its Unfair Terms Hub, which we have described in an earlier briefing.

The ICO’s Subject Access Code
The Code, issued under section 51 of the Data Protection Act 1998 (the Act) as […]
The Code, issued under section 51 of the Data Protection Act 1998 (the Act) as part of the Information Commissioner’s statutory duty to promote good practice, does not have the force of law and enforcement action will not be taken against organisations that do not apply the Code. However, compliance with the Code should ensure that organisations satisfy their obligation to deal with subject access requests – the mechanism under the Act by which individuals have the right to access any of their personal data held by third parties, upon payment of a fee.
There is much more to the Code than just the “ten steps” with plenty of examples and, in particular, a useful explanation of how the various exemptions may apply. The Code deals with issues such as children’s rights of access and subject access requests submitted via social media, and contains a reminder that the purpose behind the submission of the request is not a relevant consideration. However, the ten steps will probably be the first page data protection compliance officers will turn to. These are:
- Is it a subject access request?
- Do you have enough information to be sure of the requester’s identity?
- Do you need information from the requester to find what they want?
- Are you charging a fee?
- Do you have the information the requester wants?
- Will the information be changed between receiving the request and sending the response?
- Does it include information about other people?
- Are you obliged to supply the information?
- Does the information include any complex terms or codes?
Prepare the response.
The Code is an important document and should be required reading for those tasked with data protection compliance. The Code may be accessed here.

The Tesco strawberries case – what did Tesco do wrong?
In 2011 a pensioner complained to Trading Standards after seeing a punnet of Tesco strawberries […]
In 2011 a pensioner complained to Trading Standards after seeing a punnet of Tesco strawberries on sale for £1.99, marked down to half price from £3.99 per punnet. She asked staff whether the punnets had ever been on sale at that higher price. The staff did not respond.
Birmingham Trading Standards brought a case against Tesco under the Consumer Protection from Unfair Trading Regulations 2008 (the Regulations). The Regulations prohibit traders from using unfair commercial practices towards consumers which prevent them from making free and properly informed decisions in relation to the promotion, sale or supply of consumer products. A commercial practice is misleading if “it or its overall presentation in any way deceives or is likely to deceive the average consumer”.
Misleading acts or omissions are unfair commercial practices under the Regulations. A misleading action contains false information or in some way deceives (or is likely to deceive) the average consumer and a misleading omission is when a trader omits or hides material information which the average consumer needs to make a properly informed decision.
In this case, the argument was that Tesco had misled customers by presenting the promotion in a way that was likely to deceive customers into thinking that the discount was greater than it actually was.
The Birmingham Crown Court heard that Tesco had sold the punnet at £3.99 for one week, then at £2.99 for a second week, before selling them at £1.99 for 14 weeks. The prosecution maintained that the £3.99 was an artificially inflated price and that the “real” price was £1.99 and that the purpose of the sale at the higher price was simply to display the “real” price as “half price”.
Tesco pleaded guilty to four offences under the Regulations.
Guidance from the Department for Business, Innovation and Skills states that the period for which a product is heavily discounted should not exceed the period during which it sold at full price (although there is an exception for cases where there is excess stock, which was not the case here), a point emphasised by the judge.
The fine of £300,000 is substantially smaller than the £2.3 million that it is claimed Tesco netted from its promotion. However, the costs of any reputational damage may be harder to ascertain. The message for retailers is to ensure that the period of a discount does not exceed the period at which the product was sold at full price.

Unfair terms and consumer rights
The Government recently published its draft Consumer Rights Bill (the Bill) – which is intended […]
The Government recently published its draft Consumer Rights Bill (the Bill) – which is intended to reform consumer law in the UK and assist the legislature in implementing parts of the Consumer Rights Directive (although the bulk of this will be implemented by secondary legislation). The Bill, when introduced, would consolidate a number of existing consumer rights laws into one single legal framework and increase the rights and remedies available to consumers.
The Bill is expansive in scope – which is unsurprising considering the plethora of existing law that exists and is being consolidated – but includes measures such as:
- introducing specific rights and remedies for consumers buying digital content
- updating the rights and remedies available to consumers buying goods or services
- enhancing consumer protection from unfair contract terms
- clarifying the powers of enforcers to investigate potential breaches of consumer law
- introducing enhanced measures to give consumers greater potential for effective redress
- making it easier for consumers and businesses to challenge anti-competitive market practices.
Particular measures worthy of note are the provisions relating to the supplying of goods or services. Currently, consumers who buy goods can reject those goods as faulty within a “reasonable period”; however, what is considered “reasonable” has varied from business to business. The Bill gives businesses the benefit of a consistent approach and makes clear that consumers who buy goods will have the right to a full refund if they return faulty goods within 30 days, after which they will be able to get some money back after one failed repair or replacement of faulty goods.
On the other hand, businesses which provide services to consumers must currently comply with certain statutory warranties regarding quality, timeliness and reasonableness in charging for the services. Suppliers of services to consumers will continue to be prevented from contracting out of these basic statutory rights, but there are also enhanced provisions for consumers such that they will be able to demand that substandard services are re-performed or reduced in price.
The Bill also seeks to modernise existing consumer protection by introducing a new category of digital content with a bespoke set of rights and remedies appropriate for the nature of digital content. Consumers will have a range of statutory rights automatically included in contracts for the supply of digital content that they have paid for, or were provided free with goods, services or digital content that was paid for, including that the content must:
- be of satisfactory quality
- be fit for a particular purpose, and
- match the description provided.
There will be remedies available if these rights are breached, such as a right to an immediate refund or compensation for damage to consumer property which was caused by digital content.
Finally, also noteworthy are the enhanced enforcement powers; the Bill grants public enforcers, such as Trading Standards, enhanced investigatory, redress and compliance measures (known as “enhanced consumer measures”). These include the power to request undertakings from breaching businesses to require them to comply with these enhanced consumer measures including offering consumers compensation or other redress in respect of any loss sustained or offering consumers the right to terminate the contract. These measures must be just and reasonable as considered by the enforcement body or the court. If a business refuses to comply, the public enforcer may escalate the matter to the court.
WM Comment
As noted, the Bill is comprehensive and the information above covers only some of the key points. The deadline for the Consumer Rights Directive to be incorporated into national law is December 2013, with the provisions coming into force in June 2014.
Businesses will need to pay close attention to the upcoming changes which will be brought in under the Bill and start preparing for the transition as soon as possible.

When is a breach repudiatory?
The background to the case In October 2007, Ampurius and Telford entered into a contract […]
The background to the case
In October 2007, Ampurius and Telford entered into a contract for the development of property on a site in south London. The contract included clauses requiring Telford to ensure the work was carried out with “due diligence” and that Telford would use “reasonable endeavours to procure” that the work was completed by the target dates or as soon as reasonably possible thereafter.
Set against the backdrop of the “credit crunch” and collapse of the property market, in March 2009 Telford put part of the development on hold. In October 2010 – just after Telford had recommenced work – Ampurius sought to end the contract on the basis that the cessation of work amounted to a repudiatory breach (i.e. a breach which entitles the aggrieved party to terminate the contract and sue for damages).
The High Court agreed that there had been a repudiatory breach. Telford appealed.
Court of Appeal judgment
The Court of Appeal [1] reviewed the leading authorities on the test for repudiatory breach and that the test was whether the breach deprived the injured party of substantially the whole of the benefit of the contract. However, the court went further and stated that there was also authority for the test being whether the innocent party was deprived of a “substantial part of the benefit”, as opposed to substantially the whole benefit. The court said that, in practice, these were merely different applications of the same test.
The court said that, irrespective of the precise wording for the test for repudiation, the court should consider:
- what benefit the injured party was intended to obtain from the performance of the contract
- the effect of the breach on the injured party, including:
- its financial losso how much of the intended benefit under the contract it had already received
- whether it could be adequately compensated by an award of damages
- whether the breach was likely to be repeated
- whether the guilty party was going to resume compliance with its contractual obligations
- whether the breach had fundamentally changed the value of future performance of the guilty party’s outstanding obligations.
In the context of the contract in issue, the breach was not repudiatory. In particular, the delay had caused Ampurius little, if any, loss.
Date of assessment of breach
The court stated that it should look at the position on the date of purported termination of the contract, even in the case of an actual, as opposed to, an anticipatory breach. In doing so, the court must take into account any steps taken by the guilty party to remedy accrued breaches of contract and the court must also take into account likely future events, judged by reference to objective facts as they stood on the date of purported termination.
This aspect of the Court of Appeal’s decision is particularly noteworthy. The court has effectively said that it is possible to cure an actual breach; previous authority suggested that only an anticipatory breach could be cured. More precisely, it seems that a cure can be relevant to determining whether or not a breach was repudiatory in the first place.
Points to consider
The decision is also noteworthy for showing how high the bar is in order to establish the existence of a repudiatory breach. Innocent parties should think twice before accepting what they perceive to be a repudiation – it may very well not be and they may end up finding themselves the party in repudiatory breach.
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[1] Telford Homes (Creekside) Ltd v Ampurius Nu Homes Holdings [2013] EWCA Civ 577