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Commercial - Insight

Insight is a quarterly newsletter which aims to keep clients and contacts up-to-date with the latest legal developments in commercial law.

Latest Issue

In our latest edition of Insight Eleanor Markey looks at the recent pricing spat between Tesco and Unilever and other cases of interest with a reminder of the fines if firms don't comply with the EU regulations. We also look at oral variations to contracts and if some set-top boxes are infringing copyright. Finally, we bring you the latest team news outlining our recent appointments plus Hayley Morgan looks back at her recent visit to the AEL's IP Group's meeting in Madrid.

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Colour and shape marks: the heart and sole

Wednesday 21st February 2018

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Christian Louboutin is famous for the distinctive red sole of his high-heeled shoes, but a new opinion in an on-going trademark infringement case shows just how complicated protecting unconventional marks can be.

The underlying case

Louboutin holds a Benelux trade mark for a red sole on high heels (the Benelux mark). Though registered as a figurative mark, the registration seeks to protect the application of a particular red colour to the sole of high-heeled shoes.

The trade mark description specifically notes that “the contour of the shoe is not part of the trade mark but is intended to show the positioning of the mark.”

Van Haren is a shoe retailer based in the Netherlands. In autumn 2012, Van Haren launched a line of black high-heeled shoes with red soles under the name “Fifth Avenue by Halle Berry.”

Louboutin brought a successful claim against Van Haren for trade mark infringement in the District Court of The Hague.

Van Haren challenged the judgment by way of an opposition alleging that Louboutin’s Benelux mark was invalid.

The legal context

Trade mark law essentially operates as a way to encourage and preserve competition between producers of similar goods. A trade mark is a sign that allows consumers to identify the source of the goods they buy. This allows producers to build a reputation, either positive or negative, based on the quality of goods that they provide.

A key concern of trade mark law is to prevent certain producers from registering signs that are functional rather than distinctive. Where a sign is an inherent feature of particular goods, or the sign is a feature that is required in order for the goods to function in a certain way; that sign cannot be registered as a trade mark. To allow such signs to be tied to only one producer would give that producer a monopoly on those particular goods, or goods that function in that particular way. The same principle applies where a particular feature of goods gives them substantial value that they would not have without that feature. Should Louboutin be able to prevent other parties from having a red sole on their high heels?

In EU trade mark law, this principle appears in the Trade Mark Directive 2008/95/EC (the 2008 Directive).  At Article 3, the 2008 Directive provides that:

“1. The following shall not be registered or, if registered, shall be liable to be declared invalid:

…e) signs which consist exclusively of:

i) the shape which results from the nature of the goods themselves;

ii) the shape of goods which is necessary to obtain a technical result; [or]

iii) the shape which gives substantial value to the goods.”

Van Haren’s argument was that the Benelux mark was in fact just a two-dimensional shape in the colour red. When this shape was applied to the sole of shoes, it conforms to the shape of the sole and, more importantly, Van Haren argues, gives substantial value to the shoes. If this argument holds true, the 2008 Directive requires that the Benelux mark must be declared invalid.

The Dutch Court referred the matter to the CJEU for a ruling on how to interpret the word “shape” in the 2008 Directive. If “shape” related only to the three-dimensional properties of goods, the Dutch Court was of the opinion that the Benelux mark would not be caught and so would remain valid. If, however, the word “shape” was not so limited and did extend to the colour of goods as well, and it was determined that this gave substantial value to the goods, the Benelux mark must be declared invalid.

The Advocate-General’s opinion

Advocates-General are independent legal experts that participate in CJEU proceedings. They provide a non-biased overview of the problem and suggest a solution to the judges hearing the dispute. Their opinions are non-binding and may be departed from. It is not unusual for the final outcome of a European case to differ from the opinion of the Advocate-General (the AG) in that case.

The Van Haren case was recently referred (for a second time) to the AG to provide an opinion which has now been handed down and widely reported following a CJEU press release. The AG’s second opinion supports and expands upon the conclusion that the AG reached in his first opinion.

The AG reaches the conclusion that signs which consist of both a colour and a shape together can be caught by the wording of the 2008 Directive (above). His analysis begins by discussing the rationale behind the relevant provision of the 2008 Directive, i.e. preventing the monopolisation of certain functionalities. Because there are instances in which a colour and shape together may be necessary to obtain a technical result, the AG concludes that such signs should be caught by the prohibition, if they add substantial value to the goods. The examples the AG uses are reflective safety clothing or bottles with insulating coverings.

The AG goes on to consider how a court should decide whether a shape/colour hybrid sign “gives substantial value” to goods. Specifically, the AG considers whether value added to goods by the reputation of the producer can be counted as being value added by the sign. The AG accepts that public perceptions are relevant to the question of value added by a sign and that combinations of shape and colour that are particularly fashionable or desirable may add value to goods. The AG rejects, however, the idea that public perceptions of the brand or reputation of the producer are relevant, concluding that: “The concept of a shape which ‘gives substantial value’ to the goods, within the meaning of that provision, relates only to the intrinsic value of the shape, and does not permit the reputation of the mark or its proprietor to be taken into account.”


The opinion of the AG has already been interpreted both positively and negatively for Louboutin. Part of this is due to widespread misunderstandings of CJEU process, with a number of media sources reporting on the opinion as if it were a binding judgment. The confusion is not solely attributable to misreporting however.

Directives are laws made at an EU level. They require the Member States of the EU to achieve certain outcomes. Directives do not specify how those outcomes must be achieved, and it is for each Member State to introduce national laws that ensure that the outcome is achieved. Each of these national implementing laws will have small changes or derogations. This results in a patchwork of similar sounding but slightly different approaches to the same issues across the EU.

Further confusion is caused by the fact that the 2008 Directive is in the process of being replaced. The New Trade Mark Directive 2015/2436 (the 2015 Directive) came into force in 2015. Member States have until 2019 to implement the changes that it introduces. Of particular relevance to the Louboutin case is Article 4(1)e)iii) of the 2015 Directive. This is the equivalent of the Article 3 provision quoted above. In the new version, the wording finds marks incapable of registration where they are “signs which consist exclusively of… the shape, or another characteristic, which gives substantial value to the goods.” Arguably, had the AG considered the present case under the 2015 Directive, there would have been no question that the Benelux Mark would be potentially caught by the prohibition, if it were found that the mark gave substantial value to the goods.

Even the decision itself contains both good and bad news for Louboutin. The AG’s first conclusion, that the Benelux Mark would potentially fall within the 2008 Directive’s prohibition (if indeed it gives substantial value to the goods), means that there is a risk that Louboutin’s mark may be declared void. On the other hand, the AG’s subsequent finding that value added by the reputation of the producer is not relevant to the question of a sign adding value is a major victory for Louboutin. The AG is suggesting that the court should consider only whether a red sole gives substantial value to the goods, and not take into account the value of the reputation of the shoe being “a Louboutin”. Indeed, this is effectively the point Louboutin is making, arguing the red sole of itself does not add any intrinsic value to the shoe and has no other function other than as an indicator of origin, namely that the shoe is a Louboutin. This may ultimately be the determining factor in the final decision.

The case is far from over. As noted above, the opinions of the AG are not binding and may not be followed. Even once the CJEU reaches a binding judgment, that judgment is not the end of the matter. The ruling will be handed to the Dutch Court who will then consider how the clarification of the 2008 Directive impacts the underlying case.

For now, the key lesson to take away from Louboutin v Van Haren remains, watch this space.



Danny Greenland               Hannah Fawcett
Trainee Solicitor                 Associate & Chartered Trade Mark Attorney
Tel: 0151 600 3168            Tel: 0151 600 3291
Email Danny                      Email Hannah



GDPR reaches procurement policy

Monday 12th February 2018

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The Crown Commercial Service has re-issued a Procurement Policy Note addressing the impact that GDPR will have on the public procurement process. The note includes action points for contracting authorities, model data processing clauses and some additional guidance points on how to integrate GDPR compliance into the procurement process going forwards.

One key point to note is that the note takes effect immediately, so many of the actions and changes outlined below will be seen in procurement processes long before May.

The EU General Data Protection Regulation (GDPR) is a new law entering force in May 2018 that imposes data protection obligations on any organisation that handles personal data. The GDPR also includes very significant fines for non-compliance with the maximum being 4% of annual worldwide turnover or €20 million, whichever is higher.

Current suppliers

The PPN lists a number of actions for public authorities to take in relation to contracts that are in force now, and will remain in force until at least 25 May 2018.

As part of the ‘integrity and confidentiality’ principle in the GDPR, contracting authorities and suppliers must ensure that they have “appropriate technical and organisational measures” (ATOM) in place to protect personal data from unauthorised access, accidental loss, damage and destruction. Where a supplier is handling personal data on behalf of a contracting authority, the authority is required to seek assurances that the supplier has ATOM in place. Current suppliers that handle personal data on behalf of contracting authorities should therefore expect to receive due diligence measures such as data security questionnaires over the next few months.

The GDPR also introduces a requirement that personal data must only be used in accordance with the documented instructions of the ‘data controller.’ In most public procurement scenarios, the data controller of any personal data will be the contracting authority. As such, suppliers can expect authorities to amend contract specifications and service delivery schedules to include detailed and comprehensive data processing instructions.

Finally, the GDPR introduces new minimum contractual standards where data processing is out-sourced. Contracting authorities are required to vary their existing contracts to address data processing and security obligations. The PPN includes a template clause to be included in public contracts. The clause appears to be based on guidance issued by the Information Commissioner’s Office (ICO) and so should be acceptable to most suppliers with only minimal tweaks required.

Contracts made on or after 25 May 2018

For tenders submitted after the GDPR enters force in May, suppliers can expect pre-contractual due diligence questionnaires from contracting authorities, addressing how the supplier will protect personal data using ATOM.

After 25 May 2018, public contracts will include provisions that reflect the template data processing clauses as set out in the PPN. As noted above, the template is largely based on ICO guidance and is unlikely to be a major point of contention in the procurement process.

Some additional guidance is included in the note specifying that Data Protection Impact Assessments (DPIA) may be conducted at the pre-contract stage. DPIAs are a type of risk assessment focused on risks to personal data and privacy rights. In certain circumstances, parties will be required by the GDPR to conduct DPIAs before any data processing takes place. Where a DPIA indicates that any data processing would lead to a high risk to personal data or privacy rights, the ICO must be consulted before any processing takes place. This could potentially lead to significant delays so suppliers should seek to prepare for, and conduct DPIAs as early as possible to allow time for any consultation that is required.


The new obligations introduced by the GDPR mean that there will be additional costs involved in processing personal data. Whether for security measures, creating compliance documentation, delivering training or conducting ongoing checks, GDPR-compliance will require resources.

The PPN expressly notes that the costs of complying with the GDPR are a result of doing business in Europe and are not attributable to providing products or services to contracting authorities in the UK. As such, it is for the supplier to bear such costs.

On a related note, the PPN highlights the fact that data processors will be subject to their own statutory obligations under the new GDPR regime. The PPN recommends that contracting authorities should avoid giving any data protection indemnities to suppliers. To do so, according to the PPN, would be to undermine the spirit of the GDPR at the expense of the contracting authority.

For more information on this topic, contact Danny Greenland on 0151 600 3168, or email him at


Understanding endeavours

Thursday 8th February 2018

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Usually, where a contract imposes an obligation on one party to do something, that obligation will be absolute. In a simple sale contract for example, the obligations of the seller to deliver the goods and of the buyer to pay the purchase price in return will generally be absolute. If the obligation is not performed, the relevant party will be in breach of contract.

Endeavours clauses are somewhat different. An endeavours clause is used where the obligation on the party is to try to perform a task. This may be because the fulfilment of the obligation requires input from an independent third party (a common example may be obtaining licences or planning permissions) or where an absolute obligation would be near impossible but in order to minimise loss an obligation to try is appropriate (a specialist removals company for instance may use an endeavours clause to promise that it will try not to damage any goods in transit).

There is an established spectrum of endeavours clauses, ranging from “best endeavours” at the most onerous end of the scale, down to “reasonable endeavours” at the opposite end. One formulation that has proven particularly tricky to define is “all reasonable endeavours”, this is generally seen as lying somewhere between the other two common versions, though precisely where it falls on the scale is somewhat uncertain.

Recent case law

A number of recent cases have considered key issues surrounding the meaning and interpretation of “all reasonable endeavours.”

  1. Bristol Rovers v Sainsbury’s [2016] EWCA Civ 160

Bristol Rovers entered into a contract to sell their stadium to Sainsbury’s. Sainsbury’s intended to demolish the stadium and construct a new mixed-use development that would include a Sainsbury’s superstore and other commercial units.

The terms of the contract meant that the deal would only go ahead if Sainsbury’s could secure an acceptable planning permission (this was a defined term in the contract). To this end, Sainsbury’s was required to use “all reasonable endeavours to procure the grant of” an acceptable permission.

The contract also contained detailed provisions about the extent to which Sainsbury’s would have to pursue an appeal against a refusal to grant any permission, or the grant of a permission that was not acceptable. Specifically, Sainsbury’s would only be required to pursue an appeal where counsel advised that the appeal would have a 60% or greater chance of resulting in an acceptable permission.

Due to a change in economic circumstances, Sainsbury’s no longer wished to go ahead with the development and sought a lawful way to terminate the agreement. After taking advice from counsel that an appeal against an unacceptable permission would have less than 60% chance of success, Sainsbury’s notified Bristol Rovers that the agreement was terminated.

Bristol Rovers argued that by failing to pursue the appeal, Sainsbury’s were in breach of their obligation to use all reasonable endeavours.

The Court of Appeal sided with Sainsbury’s, they found that the detailed terms around appeals acted as a limit on the general obligation to use all reasonable endeavours. The court thought that it would be unfair to allow Bristol Rovers to rely on a general obligation in circumstances in which the parties had expressly agreed the extent to which Sainsbury’s must pursue an appeal.


  1. Astor Management AG v Atalaya Mining plc [2017] EWHC 425 (Comm)

Astor held an interest in the Rio Tinto copper mine in Spain (named for the river). Astor agreed to sell the concession to Atalaya in exchange for deferred payment of up to €63.3 million.

The agreement included an undertaking from Atalaya that it would use “all reasonable endeavours” to secure a senior debt facility and restart mining activities by the end of 2010. The deferred payment would not fall due until a) Atalaya had secured the debt facility and could draw down on it, and b) Atalaya had received all the permits it required to restart mining activities.

By 2015, Atalaya had not been able to secure the debt facility and so raised funds by issuing shares in a group company. The same year, Atalaya secured the permits it required to restart mining at the river. Once mining restarted, Astor requested the deferred payment. Atalaya responded that, as the debt facility had not been obtained, the deferred payments would never fall due.

Astor issued proceedings, claiming amongst other things that Atalaya had failed to use “all reasonable endeavours” to obtain the facility.

Atalaya argued that the “all reasonable endeavours” clause in the agreement was unenforceable due to uncertainty. Specifically, Atalaya argued that there were no objective criteria by which to measure the reasonableness of any endeavours to obtain the financing.

The High Court disagreed with Atalaya’s arguments. The Judge said that it was the job of the courts to enforce the terms that the parties had agreed; it would be inappropriate for a court to refuse to enforce an endeavours clause because the task was too difficult.

Despite finding the endeavours clause in this case to be enforceable, the court eventually ruled that Atalaya was not in breach of the clause by resorting to other financing options. Atalaya had provided evidence that several lenders had refused to provide the facility due to the fact that it would trigger an obligation to pay the deferred sum.

Astor, on the other hand, had sought to rely on arguments of counsel and had failed to provide evidence such as quotes or financial reports that would prove that Atalaya had missed a viable opportunity. On the evidence, the Judge ruled that any further attempt to obtain the facility required would not be sensible and so Atalaya was quite right not to direct endeavours of any kind towards that aim.

  1. Minerva v Greenland [2017] EWHC 1457 (Ch)

Minerva entered into an agreement to sell a plot of land to Greenland. The agreement contained a provision that entitled Minerva to an additional £3.7 million if a certain planning permission was obtained.

The contract required Minerva to use “all reasonable endeavours” to minimise the social housing provision in the planning permission.

In the event, a breakdown in relations between the parties meant that although the local authority had been prepared to grant the permission, Greenland refused to enter into a planning agreement. As a result, the planning application lapsed and Minerva could no longer satisfy the conditions to receive the additional payment.

Minerva sought to recover the £3.7 million from Greenland. Greenland responded that Minerva had breached its obligations to consult about any planning agreements, and also alleged that Minerva had not used “all reasonable endeavours” to minimise social housing in the permission.

In coming to its decision, the court found that “all reasonable endeavours” meant:

“what would a reasonable and prudent person acting properly in their own commercial interest and applying their minds to their contractual obligation have done to try and obtain the planning permission?”


The Bristol Rovers case is an important reminder that endeavours clauses cannot be read in isolation. It is always important to consider how the clause interacts with the other provisions in a contract. As a general rule, more specific or detailed provisions can override a general obligation to use all reasonable endeavours.

When negotiating an endeavours clause that will bind the other side, you should ensure that detailed provisions are avoided, or at least match the extent of the general duty in the endeavours clause. On the other hand, where a party is seeking to impose an endeavours clause on you, it may be appropriate to define in a more detailed provision the precise extent of the obligation as you see it.

The Astor case means that parties can be reasonably confident that endeavours clauses will not be unenforceable for want of certainty. Especially cautious parties may wish to include more detailed sub-clauses that deal with timescales, specific steps to be taken or specified consequences for breach. Where adding more detail to an endeavours clause however, it will be important to bear in mind the extent to which this may limit the general duty, as discussed above.

The Astor case additionally highlights the factual nature of a breach of the duty to use all reasonable endeavours. Though counsel may be able to put forward convincing arguments about what should or could have been done, without evidence to show that these courses of action were viable or at least may have resulted in the desired outcome, a court may find it difficult to rule that there has been a breach.

Finally, the definition of the duty in Minerva is a clear example of the extent to which the content of the duty to use all reasonable endeavours will depend upon the contractual context and the circumstances of the cases. The duty will always be focused exclusively on the contractual goal.

Despite the importance of the facts of each case to the content of the duty, one telling inclusion in the Minerva definition of the duty may prove important. The Judge said that the obliged party may still act properly in their own commercial interests. Though the point remains far from settled, the trend appears to be that this is the dividing line between “best endeavours” and “all reasonable endeavours.” Whereas “all reasonable endeavours” allows for consideration of the cost to the party under the duty, “best endeavours” is generally seen as requiring the party under the duty to ignore any costs to themselves and focus on the goals of their counterparty.

For more information on this topic, please contact Danny Greenland on 0151 600 3168 or send an email to

Commercial contracts – recent updates

Thursday 8th February 2018

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Good faith

Good faith is a legal concept that encompasses a variety of elements, including honesty, integrity, fair dealing, and sticking to the terms of a bargain that has been agreed. It has long been accepted that there is no general duty of good faith that applies to contracts under English law. That is to say, when parties are negotiating with each other, or are performing their various obligations under a contract, they are not necessarily required to act in accordance with the principles that make up good faith.

Despite the traditional reluctance of the courts to imply a general contractual duty of good faith, recent case law has shown a certain amount of support for the doctrine in the judiciary. In particular, Lord Justice Legatt has long been a proponent of good faith. In 2015, he gave a judgment in which he referenced “an increasing recognition in the common law world of the need for good faith in contractual dealings”, and in 2013, he found that there was an implied term of good faith in what he called ‘a relational contract.’ By this, he meant a contract which involved a long-term relationship and substantial commitment from each side. In such a contract, Legatt believed that there would be a requirement for a high degree of communication, co-operation and loyalty. His ruling was that, even though such high standards may not be expressly provided in the agreement, they are implicit in the parties’ understanding of the deal being struck.

Recent case law

Two recent cases illustrate the tension in this area of law at the moment:

  1. In Astor v Atalaya [2017] EWHC 425 (Comm), Mr. Justice Legatt, sought to give the duty to act in good faith some further traction. In this case, he gave a clear definition of what, in his view, the duty should entail:

A duty to act in good faith, where it exists, is a modest requirement. It does no more than reflect the expectation that a contracting party will act honestly towards the other party and will not conduct itself in a way which is calculated to frustrate the purpose of the contract or which would be regarded as commercially unacceptable by reasonable and honest people.”

  1. In Otomotiv v Perkins [2017] EWCA Civ 183, Perkins was an engine manufacturer and entered into a distribution agreement with Otomotiv. The agreement originally ran for three years, and continued after that initial term until either party gave six months’ notice.

In the end, the contract ran for 12 years before Perkins gave the requisite six months’ notice for termination. Otomotiv contended that to give notice to terminate at that time was in breach of an implied term of good faith. Otomotiv sought to establish the implied duty by reference to Legatt’s 2013 judgment.

The Court of Appeal ruled in favour of Perkins. Longmore LJ listed three specific reasons why there was no implied duty of good faith on the facts:

  1. the duty would contradict the express terms of the contract, which provided for a specific notice period that had been complied with;
  2. the duty would introduce an entirely new concept that was not already part of the contract; and
  3. the duty was unnecessary or hopelessly vague.


For those parties to a contract who are in favour of an implied contractual duty of good faith, the authoritative definition given in Astor by Legatt will prove helpful and should allow parties to deploy more convincing arguments against accusations that the actual content of the duty is quite vague.

Some reference within the contract to good faith would be the best route for parties seeking to benefit from the duty. Not only would it tend to suggest that the duty would not contravene the express intentions of the parties, but it would also address the reluctance that the Court of Appeal demonstrated in Otomotiv to introduce a concept to a contract where it was not already a part of the agreement.

For many parties entering into contracts however, certainty about the obligations that they are taking on will be more important than the inclusion of a duty that the other side will act honestly or with integrity. Given the reluctance of the Court of Appeal to find an implied duty of good faith where to do so would introduce a new concept to the contract, or would contradict an express term of the contract, there are some actions that such parties can take.

Firstly, the agreement should be constructed from clear duties to perform specific tasks – introduction of vague standards of performance may allow a court to find an implied standard of good faith via the back door. Secondly, parties may consider introducing a term which expressly excludes any implied duty of good faith, and where the issue is of particular importance, this is probably the safest option.

For more information on this topic, contact Danny Greenland on 0151 600 3168, or email him at

Who sets the price?

Friday 9th December 2016

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Insight - Commercial Law Update - Issue 9

A recent spat between Tesco and Unilever regarding the sale price of Unilever goods has left consumers wondering exactly who sets the price for their favourite brands.

The dispute allegedly arose when Tesco rejected a 10% price hike in Unilever goods, leading to the suspension by Unilever of deliveries of consumer favourites such as Marmite to UK Tesco stores. Ultimately the share price of both Tesco and Unilever took a tumble; the Unilever brand image was damaged, and Tesco was praised for ‘standing up against’ a large multinational force. But who does set the price for the goods you buy?

It depends on the balance of power between a supplier and retailer. For example, imagine a fledgling food company which distributes its products to Waitrose. It is clear that the retailer holds power in this relationship. On occasion the opposite will be true, for example in the case of a car dealership, where the prestige of the product allows the supplier to demand favourable treatment. In an age when consumer protection is key, suppliers must take care to ensure that price negotiation with their retailers does not become Resale Price Maintenance (RPM), which can carry with it heavy fines.

A costly lesson awaits any supplier which wishes to ring-fence its in-store prices. Within the EU, businesses have a duty to comply with Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), which governs the law of collusive and monopolistic pricing. Within the marketplace, bodies such as the The Competition and Markets Authority (CMA) are engaged in punishing dominance and financial predation. They are also interested in rooting out, in accordance with the Articles, unscrupulous businesses which seek to maintain prices at a level higher than would be natural in the marketplace.

Article 101(1) covers RPM in its multiple forms. These include:

  • Direct RPM, which involves almost unashamed - or ignorant - contractually agreed price fixing. In this instance, suppliers and retailers would enter into an agreement regarding the minimum price to be charged for goods. Cases in this area range from direct RPM of newspapers, to musical instruments, and any product in-between.
  • Indirect RPM is more complex, and involves a number of more covert practices. For example, if a supplier was to fix maximum permitted discounts, threaten retailers with penalties for failing to observe a minimum pricing level, or mimic the resale price of competitors, then indirect RPM will be found to have taken place.

RPM involves an agreement between businesses that a product or service will be sold above an agreed price. Alternately, it may also arise if discounting is prohibited, if financial incentives are offered and/or penalties are enforced for failures to sell above a certain price. Despite some complex exceptions, as a general rule RPM is illegal as it prevents retailers from acting independently, and essentially constitutes vertical price fixing.

A recent textbook example of RPM arose in the bathroom fittings sector. Ultra Finishing Limited (Ultra) imposed a “recommended” minimum online sale price, which was backed up by fines for those retailers which did not sell at or above this recommended price. Ultimately, this practice hampered the ability of the retailers to set their own prices and as such, Ultra was found to have engaged in RPM. A £1,032,505 fine was issued to Ultra, although a 20% reduction was to be triggered if Ultra stuck to the terms of its settlement. The CMA awarded a further 5% discount as a result of Ultra’s agreement to establish a compliance programme. The final fine payable by Ultra was £786,668.

The case of Ultra is not an isolated one. In May 2016, £3 million of fines were imposed on businesses which were found to have engaged in online RPM agreements with their retailers. The UK Government has since published guidance for suppliers and retailers relating to RPM and how to avoid the practice.

Suppliers must detach themselves as far as practicably possible from the price offered for their goods in store. An attempt to make price fixing arrangements verbal, in turn removing the ‘formality’ of the agreement, is still committing RPM. It is recommended that suppliers create and observe a culture of compliance within their businesses. Contracts and pricing schemes must be scrutinised and transparent. Relevant staff should know what constitutes RPM and how to avoid it.

The punishments for RPM are heavy. Infringing businesses may be fined up to 10% of global turnover, which is particularly punishing for those businesses which enjoy large turnovers, but yield small profits which would not cover the cost of such a fine. It is clear that such a fine could easily render insolvent any business which returns a small profit. Directors may be disqualified from acting in the role for up to 15 years. In the most serious instances where competitors collaborate on price fixing, individuals may be imprisoned for up to 5 years. Such penalties could financially cripple a business, or end the career of any esteemed director.

It is a concern for directors and businesses to learn that the European Commission (EC) now acknowledges and accepts certain types of limited RPM, for example allowing short term pricing operations. Whether or not a business will be deemed to have committed RPM will now rest on the facts of its contracts. Such EC guidance throws this area of competition law into significant doubt, as suppliers and retailers walk a tight line between securing the best deal and facing penalties for their actions.

A quick search through the business section of any reputable news site will confirm that anti-competitive practices such as RPM are not a rare practice. The EC has further blurred the lines for businesses by allowing certain RPM practices, which in turn almost invites suppliers to enter the ‘grey zone’ between legal and illegal pricing. To fall foul of EU competition law is to render your business and those who run it vulnerable to damaging civil and criminal penalties, so when engaging in any contract in which a specific level of pricing is discussed or imposed by a supplier, the best practice is to seek legal advice.

If you would like to discuss any pricing issues or for any other commercial law matter please do not hesitate to contact:

Eleanor Markey

Tel: 0151 600 3122

AEL Intellectual Property Group meeting in Madrid 20-21 October

Friday 9th December 2016

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Insight - Commercial Law Update - Issue 9

Hayley Morgan, our Chartered Trade Mark Attorney and Intellectual Property Executive, attended the Association of European Lawyers (AEL) Intellectual Property Group’s recent meeting in Madrid on 20-21 October. The event was hosed by Spanish law firm Gómez-Acebo & Pombo and was attended by 15 colleagues from across Europe including Belgium, Finland, Germany, Ireland, Poland, Scotland, Spain and Switzerland.

The event started on the Thursday evening with a networking meal at local restaurant TEN CON TEN.  Attendees enjoyed five courses served in traditional Spanish sharing style.

On the Friday delegates arranged a number of presentations with topics including the revised EU trade mark regulation, the Unified Patent Court, goods in transit, advertising and unfair competition, and of course Brexit, with hearty discussion around each.

Hayley said “I particularly enjoyed discussions around the implications of Brexit, which was delivered by the Chartered Institute of Trade mark Attorneys’ President, Kate O’Rourke; and about the revised EU trade mark regulation, as these areas are likely to affect my clients and therefore my advice moving forward.”

The Association of European Lawyers (AEL) was founded in 1989 and now comprises 40 firms in 41 jurisdictions.  Brabners is an active member of the Association.

Hayley has also recently qualified as the firm’s first Chartered Trade Mark Attorney. To read more about Hayley's new expertise please click here.

For more information about the AEL intellectual property group or for any Trade Mark or IP advise you may need, please do not hesitate to contact Hayley.

Hayley Morgan

Chartered Trade Mark Attorney; and Intellectual Property Executive
Tel: 0151 600 3466

Commercial team update: New appointments and our first Chartered Trade Mark Attorney

Friday 9th December 2016

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Insight - Commercial Law Update - Issue 9

We have recently strengthened our Commercial team with two new appointments and Hayley Morgan having qualified as the firm’s first Chartered Trade Mark Attorney.

Nik White provides an overview of the latest team news and how this will benefit our clients in the coming year.

Hayley becomes Brabners’ first Chartered Trade Mark Attorney

Hayley Morgan has now qualified as the firm’s first Chartered Trade Mark Attorney.

Hayley’s qualification, which was funded by Brabners, means she is regulated by the Intellectual Property Regulation Board (IPReg) and is a member of the Chartered Institute of Trade Mark Attorneys (CITMA).

Prior to joining Brabners in 2012, Hayley had a role at Shell Global Solutions providing insight on patent strategy, and by completing a Masters degree in Chemistry with Patent Law before this, Hayley has been studying and working in intellectual property for over 9 years.  The new qualification also enables Hayley to represent clients in court for intellectual property proceedings, and adds to Hayley’s experience and ability to advise clients on all types of intellectual property, including design rights, patents, copyright, and trade marks.

Nik White, Brabners’ head of Commercial and IP, said: “I’d like to congratulate Hayley for her hard work and dedication in completing what is a very rigorous qualification process. With her expertise, we are now in a position to offer the complete package of intellectual property services to new and existing clients as we help clients to define and protect their brand identity.”

Hayley Morgan

New Intellectual Property Administrator – Ioana Ghiuro

Brabners’ IP team has recruited a new Intellectual Property Administrator, Ioana Ghiurco.

Ioana successfully completed the Institute of Trade Mark Attorneys (ITMA) Trade Mark Administrator’s course prior to joining Brabners.

Ioana is also a qualified Spanish lawyer having graduated from University Complutense of Madrid in 2010 and joining the Madrid Bar Association that year.  In addition, she holds an LLM in Intellectual Property and New Technologies and is a native Spanish and Romanian speaker.

In her role as Intellectual Property Administrator, Ioana provides administrative support to fee earners on matters relating to intellectual property rights, including, in particular, trade marks, copyright and designs.

Ioana has responsibility for managing our Trade Mark Portfolio Management system, liaising with trade mark registries and foreign attorneys, searching trade mark databases and assisting with trade mark clearance search reports and prosecution work.

Ioana Ghiuco

New Associate – Victoria Trigwell

Victoria Trigwell has joined the firm as an Associate in the Commercial team.

Victoria joins from an in-house role at Optionis (a professional services umbrella organisation), having previously worked for a large private practice law firm for 11 years as part of their procurement and commercial department.

Victoria has a wealth of knowledge and expertise in procurement law, which she will add to Brabners’ already established procurement offering.

In her new position at Brabners, Victoria will also provide additional experience and depth to the wider commercial team.

Victoria Trigwell

If you wish to discuss any commercial law matters with us please do not hesitate to get in touch.

Nik White

Head of Commercial & IP
Tel: 0151 600 3103

Repackaging the tobacco industry

Friday 10th June 2016

This article was first published on Lexis®PSL IP & IT on 7 June 2016.
Click for a free trial of Lexis®PSL.

IP & IT analysis: The Court of Justice of the European Union (CJEU) recently ruled that the Tobacco Products Directive is valid. 

Colin Bell, partner at Brabners, considers the background to the cases behind the decision and the implications for the tobacco industry.

Original news

C-358/14: Republic of Poland v Council for the European Union [2016] All ER (D) 55 (May)

C-477/14: Pillbox 38 (UK) Ltd v Secretary of State for Health [2016] All ER (D) 27 (May)

C-547/14: R (on the application of Philip Morris Brands Ltd and other companies) v Secretary of State for Health [2016] All ER (D) 46 (May)
What is the background to this case?
In 2014, the EU adopted Directive 2014/40/EU concerning the manufacture, presentation and sale of tobacco and related products (the Tobacco Products Directive). The previous Directive 2001/37/EC on tobacco products dates from 2001. Since then, significant scientific, market and international developments have taken place. The EU and all of its Member States have ratified the World Health Organisation (WHO) Framework Convention on Tobacco Control (FCTC) which entered into force in February 2005 and the previous directive became outdated.
Following these developments, requests from the European Parliament and the Council of Ministers as well as commission reports, the new the Tobacco Products Directive was proposed in December 2012.
The Tobacco Products Directive harmonises several aspects of law relating to the manufacture, presentation and sale of tobacco and related products within EU Member States (including cigarettes, roll your own tobacco, pipe tobacco, cigars, cigarillos, smokeless tobacco, electronic cigarettes and herbal products for smoking). The Tobacco Products Directive imposes several new rules relating to standardised cigarette packaging, minimum unit contents, e-cigarette packaging and regulation, and manufacturer’s reporting requirements. In particular, the Tobacco Products Directive:
  • prohibits cigarettes and roll-your-own tobacco with characterising flavours
  • requires the tobacco industry to submit detailed reports to the Member States on the ingredients used in tobacco products, in particular cigarettes and roll-your-own tobacco
  • requires that health warnings appear on packages of tobacco and related products combined (picture and text) health warnings must cover 65% of the front and back of cigarette and roll-your-own tobacco packages
  • sets minimum dimensions for warnings and eliminates small packages for certain tobacco products
  • bans all promotional and misleading elements on tobacco products
  • introduces EU-wide tracking and tracing to combat illicit trade of tobacco products
  • allows Member States to prohibit internet sales of tobacco and related products
  • sets out safety and quality requirements for consumer electronic cigarettes, and
  • obliges manufacturers to notify novel tobacco products before placing them on the EU market
A number of cases seeking to delay or prevent implementation of the Tobacco Products Directive across the EU were referred to the CJEU— Republic of Poland v Council for the European Union, Pillbox 38 (UK) Limited and Philip Morris Brands. The cases sought clarification on whether the prohibition of menthol cigarettes, the introduction of various reporting and notification rules relating to e-cigarettes, and the introduction of rules implementing standardised packaging are valid.
What issues did this case raise?
Each case raised different issues.
Republic of Poland v Council for the European Union

The main issues raised were whether the wording of the Tobacco Products Directive, relating to the prohibition of the marketing of tobacco products with ‘characteristic flavours’, including the total ban on menthol products by 2020:
  • infringed the EU principles of proportionality and subsidiarity, and
  • was incorrect in using article 114 of the Treaty on the Functioning of the European Union (TFEU) as the legal basis for the Tobacco Products Directive—as the prohibition does not contribute to improving the functioning of the internal market
Pillbox 38(UK) Limited
The main issues raised related to whether the Tobacco Products Directive, art 20, which seeks to obligate e-cigarette manufacturers to fulfil numerous notification requirements with national authorities, warning requirements, and packaging requirements relating to ingredient contents and product quality, among other things:
  • infringed the principle of proportionality and subsidiarity
  • infringed the principle of equal treatment and unlawfully distorted competition within the EU single market, as the e-cigarette provisions differed so notably to the provisions relating to other tobacco products
  • infringed fundamental rights under the Charter of Fundamental Rights of the European Union (the Charter)
Philip Morris Brands
The main issues raised were whether the wording of the Tobacco Products Directive relating to the prohibition of ‘any element or feature’ (including symbols, words and trade marks) that promotes a tobacco product or encourages its consumption by creating an ‘erroneous impression about its characteristics’ infringed:
  • the EU principles of proportionality and subsidiarity
  • various articles of the TFEU, and
  • the right to freedom of expression under the Charter
This case also addressed to what extent Member States would be able to adopt more stringent national rules than those implemented in the Tobacco Products Directive relating to the standardisation of tobacco packaging.
What did the CJEU decide in relation to the arguments concerning the adoption of the Tobacco Products Directive?
Republic of Poland v Council for the European Union
In respect of the prohibition of menthol cigarettes, the CJEU concluded that the wording of the Tobacco Products Directive was valid.
It considered that tobacco products containing ‘characteristic flavours’, regardless of whether such flavour was menthol or not, made tobacco products more appealing to consumers. As such, tobacco products which contained these flavours made consumers more likely to start smoking and more likely to prolong smoking over time, particularly as they masked the harshness of smoking tobacco, so in this respect the prohibition was justified.
It also found that numerous Member States had adopted diverging rules relating to the regulation of flavoured tobacco products. Therefore, as the Tobacco Products Directive prohibits all tobacco products with a characteristic flavour, the functioning of the internal market in respect of tobacco products would be improved.
Pillbox 38(UK) Limited
The CJEU concluded that the numerous requirements of the Tobacco Products Directive in relation to e-cigarettes did not infringe the principle of equal treatment as e-cigarettes have objectively different characteristics to other tobacco products. As such, the CJEU deemed it appropriate to subject e-cigarettes to a separate legal regime.
The CJEU concluded that the principle of equal treatment could not be infringed as the provisions relating to e-cigarettes were not as harsh as the provisions relating to other tobacco products, and that manufacturers of e-cigarettes would therefore not be treated unequally.
The CJEU also held that the requirement for e-cigarettes to comply with certain notification requirements relating to product contents and quality were not disproportionate to the EU’s objective to secure a base level of protection for human health, given the health risks linked to the use of electronic cigarettes.
Philip Morris Brands
The CJEU held that its objective in implementing the Tobacco Products Directive was to protect consumers against the potential risks related to tobacco use. As such, the prohibition of any element or feature of product packaging which promotes or encourages consumption (which was considered to include cigarette packs containing ten cigarettes) was proportionate to achieve the objective, given the potential health risks to consumers.
The CJEU also held that EU Member States would be able to adopt more stringent rules in relation to the packaging of cigarette products, but only to the extent that such requirements do not affect those parts of the tobacco packaging which are harmonised under the Tobacco Products Directive.
How does the CJEU ruling compare with the Advocate General’s (AG) opinion in the case?
The CJEU ruling concurs with the AG opinion. The AG opinion concluded that the Tobacco Products Directive was lawfully adopted. The AG’s opinion considered the main queries relating to the standardisation of packaging of tobacco products, the prohibition on menthol products and the differing requirements relating to e-cigarettes.
In concluding that the Tobacco Products Directive was valid, the AG considered that the requirements imposed by the Tobacco Products Directive did not exceed the legitimate aim of securing a base level of human health within the EU. The AG also considered that the Tobacco Products Directive had been implemented on the correct legal basis and that its provisions did not infringe the principles of proportionality or subsidiarity.
To what extent is the judgment helpful in clarifying the law in relation to standardisation of the labelling and packaging of tobacco products, prohibition on menthol cigarettes and specific rules for e-cigarettes respectively?
The judgment is clear in that the wording and provisions of the Tobacco Products Directive have been ruled to be valid within the EU. As such, Member States must now ensure that the requirements of the Tobacco Products Directive, which are comprehensive, are complied with through the introduction of national regulations.
Most notably, the Tobacco Products Directive:
  • requires that tobacco products being sold within the EU have health warnings on packages of tobacco and related products—combined (picture and text) health warnings must cover 65% of the front and back of cigarette and roll-your-own tobacco packages
  • sets minimum dimensions for warnings and eliminates small packages for certain tobacco products
  • requires that cigarette packs are a cuboid shape and each pack contains a minimum of 20 cigarettes
  • bans all promotional and misleading elements on tobacco products and
  • requires that roll-your-own products must have a cuboid or cylindrical shape, or be in the form of a pouch, with each pack containing a minimum of 30g of tobacco
Other tobacco products such as pipe tobacco and cigars must also contain a general warning and an additional text warning on all packaging. However, if Member States choose, such products may be exempt from the requirement relating to graphical colour images.
Smokeless products will also need to have health warnings displayed on the two largest surfaces of the pack. There are specific rules for the size and positioning of all warnings.
The judgment also confirms that Member States may implement more stringent regulations relating to standardised packaging. It is clear that the UK, through the implementation of the Standardised Packaging of Tobacco Products Regulations 2015, SI 2015/829 (the Regulations)—which came into force on 20 May 2016—has done. The Regulations do not just ensure that tobacco product packaging is standardised, but also substantially limit and restrict the tobacco industry’s use of their ‘valuable brands, trade marks and designs upon tobacco packaging and products’ entirely.
Further, the UK High Court has handed down its judgment in R (on the application of British American Tobacco Ltd and others) v Secretary of State for Health, and other applications [2016] EWHC 1169 (Admin), [2016] All ER (D) 143 (May) that the Regulations are valid and lawful in all respects. The UK High Court found that the restriction was for entirely proper and legitimate reasons and struck a balance with public health interests. In addition the tobacco companies were not entitled to any compensation from the state for preventing them from ‘engaging in an activity which facilitates a health epidemic and imposes vast costs on the state’.
What guidance does the judgment provide in relation to the interpretation of EU directives and the associated principles of EU law?
This decision makes it clear that the CJEU are increasingly likely to consider more stringent rules, such as the ones implemented by the Tobacco Products Directive, to be proportional and not infringe other fundamental rights if they are necessary to achieve a legitimate objective, particularly if this relates to public health.
This case also demonstrates that the CJEU, is content with allowing Member States to maintain some level of sovereignty in relation to the implementation of EU directives, only to the extent that, in doing so, the EU rules and CJEU decisions are also complied with. As such, the CJEU are happy to allow the UK to implement rules relating to plain packaging within the UK, but also state that the EU rules must be complied with.
UK position
As indicated above the UK has implemented even stricter regulations. The UK government has run its own consultations (in 2012 and 2014) on standardising packaging of tobacco products and produced draft regulations which include the following proposals:
  • the external packaging would need to be Pantone 448 C with a matt finish
  • the only colour permitted for the internal packaging would be white or Pantone 448 C
  • a packet of cigarettes must be made of carton or soft material and be cuboid in shape (though may have bevelled or rounded edges)
  • the packet may contain an opening as long as it is a flip top lid or shoulder box hinged lid and
  • a unit packet of cigarettes must contain a minimum of 20
The UK proposals are stricter than the minimum EU requirements, with no branding permitted whatsoever other than plain font brand name and variant name.
What are the key takeaways for lawyers advising businesses operating in this market?
Lawyers should be mindful that the Tobacco Products Directive is likely to have a significant impact upon the strength of tobacco companies’ branding, as well as reducing their current product lines and potentially increasing cost through stringent regulatory requirements. Such companies should ensure that their businesses are able to withstand such rapid changes.
UK lawyers should also remember that the Regulations are stricter than the Tobacco Products Directive and, by the High Court’s own admission, ‘substantially limit and restrict the use’ of valuable brands and trade marks within the UK. As such, lawyers should ensure that their clients are aware of the further impact this may have on their UK operations, over and above the impact within the rest of the EU. Lawyers will also need to be aware of differences across the different Member States of the EU and internationally as tobacco industries trading and branding is now likely to significantly vary from territory to territory.
The UK Regulations are now in force, although British American Tobacco and Japanese Tobacco International are expected to seek leave to appeal the High Court decision. It remains to be seen exactly how the tobacco industry will react. In one sense the new Regulations arguably benefit existing companies as it will be very difficult for new companies and brands to enter the market due to the limitations on advertising and branding.
It should also be noted that the UK regulations include a transitional period—namely under the reg 20—that products produced in accordance with pre existing legislation before 20 May 2016 can continue to be sold until 21 May 2017.
The UK Regulations have also included special intellectual property provisions, to allow tobacco industries to continue to protect their brands and trade marks subject to certain criteria. The provisions are intended to prevent rights owners losing rights due to invalidity for non-use, bad faith and/or other grounds. There may be scope for arguing how such provisions should be interpreted and implemented.
Are there any patterns/trends emerging in the law in this area? How does this case fit in that context?
Australia have led the way in relation to the law in this area, with the EU and the UK largely following suit. France and Ireland are expected to impose similar provisions to the UK and there will be pressure on other jurisdictions to implement similar laws, with reviews being undertaken across the world and new legislation being considered, for example, in Asia.
It is clear that public health interests are being given significant importance by the EU. This may be due to numerous Member State’s cutting spending in the healthcare sector, as well as a shift in focus to a more long term health strategy across the EU looking at what impacts on the costs of the healthcare sector.
In the UK alone stricter laws have already been considered and implemented in relation to alcohol and high sugar products. As such, there is a concern that the EU or UK could soon implement other legislation, similar to that implemented by the Tobacco Products Directive, but in relation to products other than tobacco which have the potential to damage health, in particular such as alcohol and sugar.
Trade mark lawyers and attorneys have raised concerns about the potential for standardised or plain packaging and restrictions on use of trade mark rights (in particular stylised marks and logos) in other areas which could impact the value and strength of rights holder’s brands. The concern is that the Tobacco Products Directive and UK regulations pave the way for similar draconian legislation in other sectors. That said, the weight of evidence to justify such legislation (and support, for example, from bodies such as the WHO) would need to be similarly strong for any such legislation to withstand scrutiny.
Tel: 0151 600 3281



From the Queen's Speech 2016: Intellectual Property (Unjustified Threats) Bill and the Digital Economy Bill

Thursday 26th May 2016

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Insight - Commercial Law Update - Issue 8

Intellectual Property (Unjustified Threats) Bill

As part of the Queens Speech, the government introduced a new Intellectual Property (Unjustified Threats) Bill on 19 May. This draft legislation has been expected as the law in relation to unjustified threats has been under review since 2012. Unjustified threats actions exist in the UK to protect against spurious claims being sent to certain parties (such as retailers) who rather than defend any potential claim might simply do as asked in the letter to avoid further action. This can lead to the detriment of manufacturers and suppliers of legitimate products whose resellers are scared into submissions by a “groundless threat” from a rights holder and simply remove the product from stock leading to a loss in sales for the manufacturer/supplier. There are already a number of exceptions that apply under which it is not possible to bring a groundless threat action.
The new Bill has two main purposes (i) to clarify and ensure consistency of the threats provisions in relation to different IP rights; and (ii) to include an exemption for professional advisers (where they are acting on instructions of a third party and they have identified that third party in the “threatening” communication). Previously a claim for groundless threats could have been brought against a professional adviser (both their firm and in an individual capacity) for sending the letter – this new Bill will remove that risk for professional advisers acting on instructions of their clients. 
Digital Economy Bill

The Queen's Speech also announced a new Digital Economy Bill.
The bold aim behind the Bill is to make the UK a leader in the digital world.
Although it has not yet been published, the Queen outlined some of the key elements, which include:
  • The building of a world-class digital infrastructure including fast broadband and mobile networks;
  • Addressing the difference in online and offline copyright laws, and enabling registered design holders to give notice of their rights more cheaply and flexibly;
  • Support for new digital industries;
  • Reform of the way government uses data to deliver public services;
  • Fast broadband (defined as 10 megabits per second) for all households and businesses;
  • Strengthen protections for citizens in the digital world.  
Once the Bill is published we shall update you as to how government specifically intends to address these issues.
For  more information the new Bills please do not hesitate to please contact Colin Bell or Jacob O'Brien:
Tel: 0151 600 3281
Tel: 0161 836 8803



General Data Protection Regulation: Time to think about compliance

Thursday 26th May 2016

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Insight - Commercial Law Update - Issue 8

Ratification of the General Data Protection Regulation (GDPR) means that business have until 25 May 2018 to comply with the new law. It sounds far away but the long lead-in time is going to be necessary for most businesses, given the amount of work that will need to be done to achieve compliance. Ensuring compliance is essential, especially in light of the new tough penalties: up to 4% of annual global turnover or up to €20million, whichever is greater.

The GDPR brings in stronger individual rights, tougher penalties for data breaches, and mandatory reporting of breaches.

The reporting requirements in the event of a data breach are stringent - businesses will have 72 hours from awareness of a breach to self-report to the ICO, and to inform those individuals affected. That means that within 72 hours, businesses will have to be able to:

  • pinpoint which data assets have been targeted;
  • assess the risks concerned;
  • make the report to the ICO;
  • inform the client or consumer base of their exposure.

Businesses would be wise to familiarise themselves with the GDPR, and start putting procedures and policies in place to ensure readiness now.

A thorough data audit, including deletion of data no longer required, is a good starting point. Extending good data-hygiene by limiting access to data to only those who absolutely need it, and thorough training on keeping data secure are measures likely to help, given how many serious breaches are due to inadvertent human error. 

The two year lead-in window should be taken advantage of, rather than being seen as an opportunity to ignore the GDPR until absolutely necessary. 

In another blog post, we have addressed the key changes brought about by the GDPR which are likely to affect your business, including some key tips that we recommend you to follow.

Need advice or wish to talk to us?

If you would like to discuss any matters about this please do not hesitate to contact:

Tel: 0151 600 3302