Don't worry if you missed our Tech Case Law Update during Tech Week 2020. We've provided below a summary of the key cases and a link to the full recording. Any questions do get in touch.
Drafting commercial contracts
Worked examples can be your friend
In Altera v Premier Oil the contract contained a formula for adjusting the charges payable, but there were inconsistencies between the narrative description of the formula and the worked examples. The court held that the worked examples were integral parts of the contract and should be followed. From a drafting perspective, worked examples can be a very helpful way to limit subsequent disagreements, but it's essential to ensure that they accurately reflect the narrative description.
Another reminder that notice provisions will be interpreted strictly
Boskalis v Atlantic Marine is a reminder that, where there is a contractually prescribed process for making a notification, you have to follow it to the letter. From a contract management perspective, it's vital to ensure that notices are issued in a contractually compliant way. The drafting takeaway of course is that you have to craft notice provisions which are practical and drive the behaviours that are important in the context of the contractual relationship.
Contractual estoppel can be a powerful tool
In Wallis Trading v Air Tanzania the court held that, in light of its agreement to certain contractual warranties, a contract party was estopped from making claims in later court proceedings that contradicted the facts set out in those contractual warranties - even if both parties knew at the time of the contract that those facts weren't true.
Drafting for the unexpected
Travelport v WEX involved the timely question of whether COVID-19 could be a materially adverse event. The court held that the usual rules of contractual interpretation applied and previous cases on MAE clauses had little precedent value, so the judgment turned on the specific (and complex) drafting of the MAE clause in question. The case highlights that adding complexity to a MAE clause (here, comparison of the impact to others in the "industry" and multiple carve-ins and carve-outs) may make the clause more difficult and unpredictable to apply in practice.
Classic Maritime and 2 Entertain demonstrate two important limitations of force majeure. First, the party invoking force majeure is (depending on the drafting of the specific clause) very likely to have to show it would actually have been able to perform its obligations in any case; in Classic Maritime, the force majeure claim failed because the supplier was unable to perform in any event due to an unrelated accident at its production facility. Second, events will not be beyond your reasonable control if reasonable measures would have prevented the resulting loss or damage; in 2 Entertain, damage caused by a fire during the 2011 riots in Tottenham did not amount to force majeure because the risk of arson was foreseeable and preventable.
Finally Bains tells us that, if you find yourself on the wrong end of a breach notice, promising to cure the breach may not be enough; you may actually need to remedy the breach within the contractual cure period.
Tech IP Disputes
Tackling misuse of confidential information abroad
Shenzhen Senior Technology Material v Celgard highlighted some of the key practical issues when seeking to protect trade secrets across borders:
- Trade secrets disputes typically involve a mosaic of different laws: at a minimum, potential applicable laws include the governing law of any applicable contract, the law of the place where the "theft" or initial misuse takes place, and the law of the country/ies where damage, such as lost sales, ultimately occurs.
- You should, of course, put in place a contract where you can, and should give careful thought to the right governing law and jurisdiction bearing in mind the wider context in which the information is disclosed, the importance of trade secrets within that wider context, the risk of misuse and likely key jurisdictions for enforcement. However, you should also be prepared to fight to protect your trade secrets on many fronts.
Trends in tech patent licensing and litigation
Recent cases in the UK and Europe demonstrate some high-level trends that may push patent infringement and licensing further up the agenda for the technology sector:
- While there is an exclusion from patent protection for computer programs "as such", the application of that exclusion is fact-specific, and we are seeing greater interest in seeking and enforcing patent protection for computer-implemented inventions, particularly in the fintech sector.
- The incorporation of patented, standardised connectivity technology into an ever-increasing range of products and services brings patent infringement risk. The rules of the patent litigation game are particularly complex for patents covering an invention that is an essential element of a standardised technology.
- These trends shine a spotlight on IP indemnities in commercial agreements.
Copyright issues in the tech sector
The liability of online intermediaries for unlawful content continues to be a hot topic, but the CJEU reference in Austro-Mechana raised a new issue for the tech sector: the potential for cloud service providers to be liable to pay "blank tape" copyright levies. These copyright levies provide for the payment of equitable remuneration by anyone who places on the market "storage media", which could be used to privately reproduce copyright material; the CJEU has been asked to rule on whether cloud storage could be subject to these requirements. While a judgment is some way down the track, cloud service providers should keep an eye on the outcome.