E Update October 2008
ICO carries out data sharing review
The ICO’s review found that the legal principles surrounding data sharing need to be both clarified and simplified. Also highlighted was the need for change in the culture that influences how personal information is viewed and handled.
The review looked at the framework for the use of personal information in both the public and the private sectors.
Key recommendations following the review include suggestions such as companies should strive to, as a minimum, review their systems of internal control over using and sharing personal information on an annual basis, training of those using and sharing personal data should be enhanced and privacy policies should state the personal information which is held by the organisation, why it is held by them, what it is held for, who can access it and who they can share it with.
For a full analysis of all of the ICO recommendations please see a copy of the full report on the ICO website at www.ico.gov.uk.
Software lobby groups join forces with aim to educate businesses
The software industry pressure groups, The Federation Against Software Theft (Fast) and Investors in Software (IiS) have joined forces in order to improve software education amongst businesses. Fast and IiS are two of the most respected, independent names in the UK software industry.
The two organisations will retain their separate brand names and some of their distinct roles. In particular, Fast will continue to act as a leading software IP protection body, while IiS will promote best practice and consistent standards to advance professionalism in Software Asset Management (SAM). At the same time, the two organisations will be working together to strengthen and clarify the advice given to businesses in relation to Best Practice Asset Management.
The logic of this merger becomes clear when you consider the fact that organisations increasingly have to demonstrate good corporate governance through compliance audits. Software audits are a key component of any comprehensive software asset management plan and it is essential that your business carries these out on a regular basis.
IT contractors beware of the taxman
The Professional Contractors Group (PCG), which represents the UK’s freelancers, has expressed its shock at the High Court’s decision in the recent “Dragonfly” case concerning IR35.
IR35 is a piece of tax legislation introduced in April 2000 which meant that HMRC can tax some contractors as though they are employees of their clients. For those caught it means paying significantly more tax.
The case involves Jon Bessel, the owner of Dragonfly Consultancy Ltd, failing to overturn a tax demand for £99,000. The PCG supported Mr Bessell in bringing his appeal because of the wider implications that the case would have on contractors. PCG’s managing director stated that the case was “potentially a massive blow to freelancers throughout the country” and how “the case threatened the long established defences against IR35.”
Despite paying for training and equipment, Bessell’s business Dragonfly Consulting was considered an intermediary, with Bessell falling within IR35.
This ruling puts many contractors’ IR35 defences in danger of falling within the same situation as Mr Bessell and falling under IR35. According to the Special Commissioner, and confirmed in the appeal, Bessell was controlled by the client and under the client’s “direct supervision and control.” Based on this ruling, it seems that the case law on control has changed, a lesson that needs to be clearly understood for future contractor defences against IR35 as pointed out by the PCG. The PCG have also reinforced the importance of contractors ensuring that all paperwork is accurate and up to date, including the contractual agreement between the agent and the client.
US widens enforcement options of open software licenses – will UK courts follow?
A US Court of Appeal has held that the use of open source software in contravention of the conditions of the open source license constitutes copyright infringement and not merely a breach of contract.
Open source software licenses allows users of software to use the source code, as well as modifying it, providing that certain conditions are met. For example, one of the conditions is ensuring the original source code of the software is identified. In this particular case, the terms of use of the open source software license stipulated conditions to be followed by any subsequent modifiers of the software. The defendant made use of part of the software but failed to follow these conditions.
In such situations, a common claim would be for breach of contract. However, in this case, the Court considered that the terms of the open source license constituted conditions and limitations on the scope of the license and therefore, it was possible that the contravention in the use of the software constituted as copyright infringement.
There are a number of factors which the Court took into account when arriving to its decision, such as:
- The terms of the license were specified to be conditions;
- The conditions limited the scope of the license;
- The remedy of damages available under contract law was not a sufficient remedy in this case, whereas copyright law permits injunctions; and
- Although no money is charged for the use of open source software, it still has economic benefits and so should be afforded legal protection.
Although this is a US case and is founded on legal concepts of US law, it will be interesting to see how the UK courts would treat a similar claim. The additional remedies which are available for copyright claims as opposed to breach of contract claims would certainly appeal to copyright holders who license their software as open source.
Potentially the most important case for the IT services sector
The trial of the BSkyB v EDS case has recently ended in the High Court and the outcome is eagerly awaited, as this case could have serious consequences for IT companies working on projects. Depending on the outcome of the case, it could potentially be the most important case yet for the IT services sector.
This case is so important because it is expected to determine when and how statements by contract bid teams in IT projects can expose their company to unlimited liability, if the project does not turn out to be expected.
When IT projects run into serious problems, aggrieved customers are now trying a different method to overcome limitation and exclusion clauses: fraudulent misrepresentation. A fraudulent misrepresentation has the potential to altogether defeat exclusion and limitation clauses already agreed in contracts. If claims are successful, the supplier would have unlimited liability for all losses, including loss of profit or expected benefits and indirect/consequential losses.
The Court’s decision is expected any time after 1 October 2008. If you are interested in reading more about this case, please email Kam Johal at the below address for a full article:
kjohal@clarkslegal.com.
Saving on business time and money
The Department for Business Enterprise and Regulatory Reform will introduce a number of important business laws as of the 1 October 2008.
In order to save on business time and money, government departments will issue all their changes to business regulations on only two dates per year – 6 April and 1 October. This is in an attempt to promote better regulation, in regulating only where necessary, proportionately and at the same time reducing bureaucracy. It is hoped that businesses will save through a reduction in a number of administrative costs.
The key government departments which will introduce business regulations on these dates are BERR, DEFRA, Communities and Local Government, Home Office, HSE and Food Standards Agency. Details of the new regulations can be found at www.businesslink.gov.uk.