2 million Euros, 1.8 million Euros, 1.5 million Euros, 10% of global turnover: these are the types of fines companies doing business in France can now face. France was seen as a jurisdiction where fines were low or non-existent up until very recently when large foreign companies, mostly through their French subsidiaries, started to be mentioned in the headlines as having been sanctioned by the French market surveillance authorities or French Courts. Below are the four main issues that have led to such recent financial and reputational risks.
Authorities and Courts will examine your contracts
Under French law, contracts must be balanced. In other words, there should not be undertakings by only one company and none from the other. There should be no situation where there is a significant imbalance in favour of a party.
On 12 June 2019, the Paris Court of Appeal, for the first time,imposed a fine of 2 million Euros on a company for having provided, in its contract, terms which led to a contractual imbalance against the suppliers of that company.
The French market surveillance authorities, who are at the origin of this litigation, commented on this decision as follows: “Besides the specific case to which it relates, this decision (…) is particularly important because, having been asked to rule on this question for the first time, it considered that the [authorities] could use, in legal proceedings, statements from companies who are victims of unfair commercial practices without revealing their identity. Indeed, the victims of such unfair commercial practices generally fear being the target of economic retaliation if they give testimonies in the scope of proceedings (…). By making it possible for claimant companies to remain anonymous, this case law further strengthens the revelation and punishment of unfair commercial practices“.
One can already imagine the consequence of such a decision when reading the French authorities’ reaction. Indeed, not only do French Courts allow French authorities to read and check contracts entered into with French companies, they also allow them to refer imbalanced contracts to the Courts. In addition, any complaining company will remain anonymous after drawing the authorities’ attention to a contract they believe is not compliant.
Authorities and Courts will check how you enforce your contracts
Companies are also closely monitored in their relationships with other companies and, in particular, their suppliers. The French authorities are well known for their strict approach, aiming to protect small and medium French businesses against larger international groups. Conditions around payment terms are an easy way to carry out such controls and sanction them.
In 2018, 263 companies were sanctioned in France, representing a total in fines of 17.2 million Euros. These figures are much higher than in 2017 (155 fines, totaling 8.6 million Euros). In April 2019, two companies received record fines of 510,000 Euros and 670,000 Euros. The latest fine,which totaled a record 1.8 million Euros, was handed down to a French electricity provider.
More importantly, the French authorities have created a specific webpage which publishes the names of the penalised companies and their subsequent penalties. This is not standard practice in France and can be at the origin of difficulties for companies trying, for instance, to develop their business here. On every occasion, the company receiving the fine is in the headlines.
It is, therefore, not sufficient to have the right payment term conditions mentioned in the contract; the French authorities will check that it is enforced at all times.
Courts will check how you terminate your business relations
When doing business in France, it is essential to know about litigation arising from alleged sudden termination of business relations. When professionals enter into contractual relations, they can reasonably consider that the contract will be the binding law between the parties, including the termination clause. However, in France, it is not possible to terminate established business relations whenever you wish or whenever you think you are contractually able to do so. The notice period determined in the contract will not necessarily be enforceable. Indeed, the party wishing to terminate the contract will have to respect a certain period of time depending on the duration of the business relationship, and the economic dependency between the parties. If the applied notice period does not comply with the above, the victim will be able to claim damages on the ground of the sudden termination of business relations.
As such, French Courts will not hesitate to enforce a much longer notice period than what is detailed in the contract (e.g. 90 days), the idea being that the weaker party needs protection in order to get organised. The said weaker party can claim for damages, which would correspond to the loss of contribution margin, for example the difference between turnover from which the victim was deprived after deducting the expenses that were not incurred as a result of the decline in activity resulting from the termination.
By Order no. 2019-359 dated 24 April 2019, the legislator has decided to provide some clarity by stating that an 18-month notice period would allow businesses to avoid liability. This period is presented as a maximum, beyond which it will no longer be possible to hold the party at the origin of the termination liable. This exemption from liability if the parties comply with an 18-month notice period is intended to apply regardless of the duration of business relations. This is particularly interesting in the scope of very long business relations as, until now, companies faced a risk of having to comply with a notice period of more than 18 months. It is, however, a very long period for short business relations and we will have to monitor how the French courts will apply it.
Companies can be held criminally liable
In France, both companies and their representatives can be held criminally liable. One of the most common offences companies are prosecuted for are deceit and misleading commercial practice. These offences can be linked to products and services. Companies must be very careful about their communications, whether direct or indirect, on the products/services themselves and online, etc. The increase of the applicable fine highlights the high risk for companies. Indeed, the fine has increased from 300,000 Euros to 1.5 million Euros with the option to raise the fine to up to 10% of the turnover of the company.
The increase in the criminalisation of French law against companies can also be observed in the development of new offences against companies. By way of example, planned obsolescence, according to which producers can be held liable if they are developing products in a way that would render them obsolete faster than they need to be, in order to push consumers to purchase a new product (Article L.213-4-1 of the French Consumer Code). The obsolescence that can give rise to sanction can be aesthetic, functional, technical, direct, due to the change in the accessories, etc. The scope is very large, as are the potential sanctions. Companies risk a fine of up to 1.5 million Euros, which can be increased to up to 5% of the average turnover of the company for the three years preceding the offence.
As one can see, criminal liability is, in all the above offences, possible even when there is no safety issue and just a communication/marketing issue.
Sylvie Gallage-Alwis is a partner and Deborah Azerrafis an associate at Signature Litigation’s Paris office. www.signaturelitigation.com
EU Commission sets out new intellectual property action plan affecting SEPs, patent pooling and EU design protection
The EU Commission published a new intellectual property action plan. The action plan, touted as “an intellectual property action plan to support the EU’s recovery and resilience” outlines possible future moves, noting that intangible assets are “the cornerstone of today’s economy”, with IPR-intensive industries generating 29.2% (63 million) of all jobs in the EU during the period 2014-2016, and contributing 45% of the total economic activity (GDP) in the EU worth €6 trillion.
The action plan also notes that the quality of patents granted in Europe is among the highest in the world, and that European innovators are frontrunners in green technologies, and leaders in specific digital technologies, such as connectivity technologies. That being said, the action plan notes that while smart intellectual property (IP) strategies can act as a catalyst for growth, European innovators and creators often fail to grasp the benefits of IP.
The action plan indicates that the Commission is willing to take stronger measures to protect European IP, to increase IP protection amongst European SMEs and to help European companies capitalise on their inventions and creations.
Ambitiously, the action plan also notes that the EU aspires “to be a norm-setter, not a norm-taker” and is keen to seek ambitious IP chapters with high standards of protection in the context of Free Trade Agreements, to help promote a global level playing field.
Some of the key takeaways are noted below.
Unified Patent (UP)
The implementation of the Unified Patent is seen as a priority in the action plan, indicating that it will reduce fragmentation and complexity, and will reduce costs for participants, as well as bridging “the gap between the cost of patent protection in Europe when compared with the US, Japan and other countries”. The action plan also indicates that it will “foster investment in R&D and facilitate the transfer of knowledge across the Single Market”.
With the introduction of 5G and beyond, the number of standard essential patents (SEPs), as well as the number of SEP holders and implementers, is increasing (for instance, there are over 95,000 unique patents and patent applications supporting 5G). The action plan notes that many of the new players are not familiar with SEP licensing, but will need to enter into SEP arrangements, and that this is particularly challenging for smaller businesses.
One area that has garnered a lot of press attention recently relating to the licensing of SEPs, and in particular to businesses that are perhaps not as familiar with SEP licensing, is that of the automotive sector. The action plan acknowledges this and notes that “although currently the biggest disputes seem to occur in the automotive sector, they may extend further as SEP licensing is relevant also in the health, energy, smart manufacturing, digital and electronics ecosystems.”
To this end, the Commission is considering reforms to further “clarify and improve” the framework governing the declaration, licensing and enforcement of SEPs. This includes potentially creating an independent system of third-party essentiality checks, and follows off the back of a pilot study for essentiality assessments of Standards Essential Patents and a landscape study of potentially essential patents disclosed to ETSI also published alongside the action plan.
Modernising EU design protection
The Commission has indicated that it wants to “modernise” EU design protection “to better reflect the important role design-intensive industries play in the EU economy”. At present, the Commission is asking for stakeholder feedback on the options for future reform. Recent results of an EU evaluation show that the current legislation works well overall and is still broadly fit for purpose. However, the evaluation has also revealed a number of shortcomings, including the fact that design protection is not yet fully “adapted to the digital age” and lacks clarity and robustness in terms of eligible subject matter, scope of rights conferred and their limitations. The Commission also considers that it further involves partly outdated or overly complicated procedures, inappropriate fee levels and fee structure, lack of coherence of the procedural rules at Union and national level, and an incomplete single market for spare parts.
Updating the SPC system
While the Commission notes that, following an evaluation, the Supplementary Protection Certificate (SPC) framework finds that the EU SPC Regulations “appear to effectively support research on new active ingredient, and thus remain largely fit for purpose”, it believes the EU SPC regime could be strengthened to reduce red tape, improve legal certainty and reduce costs for business. One option being touted is to introduce a centralised (‘unified’) grant procedure, under which a single application would be subjected to a single examination that, if positive, would result in the granting of national SPCs for each of the Member States designated in the application. The creation of a unitary SPC, complementing the future unitary patent, is listed as another option.
Patent pooling in times of crisis
The EU Commission notes how the pandemic has highlighted the importance of effective IP rules and tools to boost innovation and secure fast deployment of critical innovations and technologies, both in Europe and across the globe, but that it sees a need to improve the tools in place to cope with crisis situations. To this end, the action plan includes proposals to introduce possible mechanisms for rapid voluntary IP pooling and better coordination if compulsory licensing is to be used.
Increasing access for SMEs to IP protection and the introduction of an “IP voucher”
The action plan notes that only 9% of EU SMEs have registered IP rights. It aims to help SMEs better manage their IP and improve their competitiveness by giving EU SMEs easier access to information and advice on IP. Through the EU’s public funding programmes and further rolled-out at a national level, EU SMEs will get financial aid to finance so-called IP scans (comprehensive, initial, strategic and professional advice on the added value of IP for the individual SME’s business), as well as certain costs related to IP filings.
This will happen through the implementation of an “IP voucher”, which is made available in co-operation with the EUIPO, providing co-funding of up to €1,500 for:
- IP Scans: up to 75% of the cost and/or
- registration of trade marks and design rights in the EU and its Member States: up to 50% of the application fees.
SMEs will be able to apply as of mid-January for the IP voucher, through a dedicated website. We understand that the voucher will be provided on a “first come first served” basis.
The action plan also indicates the EU Commission’s intention to make it easier for SMEs to leverage their IP when trying to get access to finance, and that this may be done for example through the use of IP valuations.
EU toolbox against counterfeiting
The EU commission notes that counterfeiting is still a major problem for European businesses and proposes that an “EU toolbox” is set up to set out a co-ordinated European approach on counterfeiting. The goal of this EU toolbox should be to specify principles for how rights holders, intermediaries and law enforcement authorities should act, co-operate and share data.
AI and blockchain technologies
The action plan notes that in the current digital revolution, there needs to be a reflection on how and what is to be protected – perhaps a nod to the recent litigation we have seen regarding whether an AI can be considered as an inventor. The action plan in particular notes that questions need to be answered as to whether, and what protection should be given to, products created with the help of AI technologies. A distinction is made between inventions and creations generated with the help of AI and the ones solely created by AI. The action plan notes that the EU Commission’s view is that AI systems should not be treated as authors or inventors, which is the approach taken by the EPO, but that harmonisation gaps and room for improvement remain and the EU Commission has indicated that it intends to engage in stakeholder discussions in this respect.
There is much to take in from the action plan, and we will closely monitor developments in all of the above areas to see what will be implemented and when.
Tech talent visa sees 48% increase in applications over one year as global founders look to the UK
- Demand for Global Talent Visa applications has increased over two consecutive years since 2018 – up 45% and 48% respectively
- Demand is expected to increase from 2021as, from January, the Tech Nation Visa will be opening up applications to exceptional tech talent from the EU hoping to work in the UK
- 52% of those endorsed for the Tech Nation Global Talent Visa are employees, while 28% of those endorsed are tech founders
- App & software development, AI & machine learning,and fintech are the most common sectors for visa holders. Most endorsed applications come from India, the US and Nigeria
- 41% of Global Talent Visa applicantschose to reside outside of London to work in the UK’s strong regional tech hubs
Today, Tech Nation, the growth platform for tech companies and leaders, launches a new report, which reveals changes in the international talent landscape and growing interest in the Global Talent Visa.
The Tech Nation Global Talent Visa
As the race for global tech talent heats up, many countries have been making their pitch to attract the best and brightest tech talent to grow their tech industries and create jobs. The Global Talent Visa, for which Tech Nation is the official endorsing body for Digital Technology, plays a key role in enabling international tech talent to contribute to the UK economy and to the growth of high priority sectors such as AI and Cyber.
The visa has seen applications increase significantly over the past two years, with 45% and 48% increases respectively. Since November 2018, the Tech Nation Global Talent Visa has received 1,975 applications and endorsed 920 visas from over 50 countries worldwide. Demand is expected to increase in 2021 with the EU coming into the route.
52% of those endorsed for the Tech Nation Global Talent Visa since 2014 are employees at some of the UK’s leading tech firms, helping to fill existing talent gaps, while 28% are tech founders bringing ideas, talent and capital into the UK’s fast growing tech sector. In 2020, the visa enabled 421 founders to set up business in the UK, up from 400 in 2019.
This global talent is distributed right across the UK. 41% of endorsed applicants for the visa are based outside of London, working in the UK’s strong regional tech hubs. App & software development, AI & machine learning, and fintech are the most popular sector destinations for visa holders, reflecting growth in those tech sub-sectors. India, the US, and Nigeria are the top three countries from which exceptional talent has come into the UK with the Tech Nation visa.
A surge in demand and interest
Labour markets around the world and in the UK have undergone profound shifts in 2020. The data released today shows that there has been a 200% increase in the volume of users in the UK searching online for terms explicitly related to ‘UK tech visas’ between April and September 20201. This surge in interest to work in the UK’s digital tech sector is reflected globally too, with a 100% increase in users internationally searching for these terms in countries like the US and India.
Digital tech roles remain in high demand in the UK. Cyber skills are becoming increasingly important within the UK, particularly in regions such as Wales and the East and West Midlands where there has been a huge increase in demand between 2017 and 2019 (351%, 140%, and 86% respectively). Demand for AI skills has increased by 111% from 2017 to 2019, with Northern Ireland and Wales seeing the greatest increases in demand – 418% and 200% respectively.
Minister for Digital and Culture Caroline Dinenage said: “It’s no surprise the UK’s world-beating technology sector appeals to international talent. Our dynamic companies reflect the UK’s long-standing reputation for innovation and are renowned on the global stage. We are open to the brightest and the best talent, and this visa scheme makes it easier for companies across the country to recruit the talent they need to grow.”
Stephen Kelly, Chair of Tech Nation, comments: “The UK is a global talent magnet for Tech founders. The UK provides rich opportunities for entrepreneurs to set up, flourish and scale a business. The Global Talent Visa is crucial to making this process easy and accessible. Tech Nation’s Visa Report shows that, despite the pandemic, international interest to work in the UK tech sector has never been higher. Attracting tomorrow’s tech leaders to the UK is crucial to the continued growth of the sector, the UK’s place in the world, and driving the nation through recovery to growth in the digital age.”
Trecilla Lobo, SVP, People at BenevolentAI and Tech Nation Board Director, said: “The UK tech ecosystem continues to contribute to the creation of jobs and to innovative products and services. The Tech Nation Visa enables the UK tech sector to maintain its competitive advantage by attracting the best talent in specialist skills in tech, research and AI and a more globally diverse perspective to help us innovate and create amazing products and services. As an immigrant to the UK in my late teens, the UK visa scheme has enabled me to bring my experience, expertise and contribute to the people agenda for tech scale-ups in the UK, and helped me build a successful career in tech. I am really excited that the Tech Nation Visa will open opportunities and streamline the visa process for future global tech talent.”
Hao Zheng, Co-founder & CEO at RoboK, based in Cambridge and Newcastle, said: “I decided to work in UK tech because of the well-established ecosystem, world-class research and innovation and the high-level of experience that is extremely valuable for startup technology companies.”
Congcong Wang, Head of Operations at TusPark, based in Cambridge, said: “The UK is a world leading innovation hub, particularly in the fields of AI and Healthcare. Its environment fosters young talent, breeds disruptive innovation and creates amazing companies. Also, the culture of the UK is nurturing and tolerant for innovation, as it is considered a “safe place” for those inspired to take on the more risky route of entrepreneurship.”
Sumit Janmejai, Data-Driven Cybersecurity Professional at Capgemini, based in London said: “Having studied in the UK and worked with UK professionals, I could appreciate the fact that the UK is fast becoming the center of innovation, research and development in the Tech Industry. Besides that, the country offers an excellent life, welcoming culture, and a safe environment. It was an easy choice.”
Are bots eating your Facebook budget?
By Mike Townend, founding CMO of Beaconsoft Ltd
In an increasingly digitised world, social media has arguably become the most powerful and influential tool at the disposal of businesses, both large and small.
With more than 3.6 billion active social media users worldwide today, it is no surprise that many companies view it as an unparalleled means of marketing their products and services to new and otherwise unreachable audiences, as well as an opportunity to better understand consumer demand and habits.
Facebook is often regarded as one of the very best social media platforms for marketers – not least because of its targeted digital advertising service – but many firms using it may not realise just how much of their budget could be being wasted due to ad fraud.
Numerous studies suggest digital ad fraud affects between 10% and 60% of all types of digital advertising, with businesses of every size falling prey to so-called ‘bots’ – automated programs used by scammers to undercut deals, divert visitors or steal clicks.
But how do bots work, how might they be affecting businesses’ Facebook budgets, data and analytics, and what can be done to combat them?
How do bots work?
A report published by security firm Imperva found that bots – both good and bad – are responsible for 52% of all web traffic, while a separate study by White Ops concluded that as much as 20% of websites that serve ads are visited exclusively by fraudulent click bots.
In simple terms, a click bot is specially designed to carry out click fraud – in other words, the bot poses as a legitimate visitor to a webpage and automatically clicks on pay-per-click [PPC] ads, buttons or other types of hyperlinks.
Their purpose is to trick a platform or service – in this case, Facebook – into believing that real users are interacting with the webpage, app or ad in question.
Usually, bots will not just click a link once; they will click it over and over again to give the impression that the webpage is receiving a high level of traffic.
Why is this a problem?
The presence of click bots on Facebook is particularly problematic because they can effectively drain a business’ online marketing budget without many of its targeted ads reaching real users who might have a genuine interest.
There are a number of reasons why click fraud could be used – for example, competitors may employ a ‘click farm’ – a group of low-paid workers or bots hired to click on paid advertising links – or organised criminals may have found a way to profit from clicking on a business’ links.
In other cases, apps and software are created to collect the payout for a company’s ads, often with the help of bots.
Considering the average cost per click in the UK is £0.78, according to Hubspot, with some ad campaigns for popular key phrases running at £10 per click, or even more, it is clear to see how easily this could mount up if a firm’s budget were to be hijacked by scammers.
How might bots affect data and analytics?
Negative click bots have the potential to produce skewed analytics from Facebook advertising campaigns.
Because many businesses are unable to distinguish between fake clicks and legitimate ones, the data that they collect can lead to false conclusions and decisions that could have a detrimental impact on the business. For example, firms may choose to overspend or under-invest on a campaign based on findings that are substantially erroneous.
Businesses must be confident that they are making sound decisions that are informed by reliable data and analytics – and fortunately, there is a way that they can do this.
Taking the fight to the bots
There are a number of methods that firms can use to identify bot clicks, some more straightforward than others.
Frequently checking Facebook analytics for irregularities in traffic that could be attributable to bots can make this task considerably easier.
Specific things to monitor include the average number of page views, the average session time, and the source of referrer traffic – if there are any glaring anomalies in the data, bots could be the source.
Big spikes in page views caused by a higher number of visits than usual can also be indicative of bot activity and are especially dangerous given their propensity to slow down the page for genuine visitors.
Once malicious traffic has been identified, steps can then be taken in blocking it at source, although this is not a simple process and requires technical knowledge and know-how.
After removing negative click bots, companies can take comfort in knowing they are optimising their campaigns by gaining accurate insights that help to increase efficiency, lower the cost per visit, and improve return on investment.
Defeating the bots that are impairing a business’ performance on Facebook is by no means easy, and it requires time and effort to keep malicious traffic under constant surveillance.
Having experts on your side who are well versed in identifying and removing instances of click fraud can help to turn the tide in the battle against bots and ultimately allow a company to make big savings on its advertising spend.
Firms not only owe it to themselves, but to their customers also, to knock these harmful and disruptive programs offline for good.
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