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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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Bit buy bit – dealing with the rise of cryptocurrencies like Bitcoin

Friday 10th October 2014

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Insight - Commercial Law Update - Issue 5

What is Bitcoin and why is it important?

Bitcoin is a decentralised electronic currency and the first fully implemented cryptocurrency. Bitcoin is an open source project and as such is not controlled by any single government or organisation

Bitcoin is an important consideration for businesses as it is growing incredibly quickly – at the end of August 2013 the total value of bitcoins in circulation was over $1.5 billion. Bitcoin is now being used by a growing number of businesses, there are currently 3114 companies listed who accept bitcoin payments, including Wordpress and Reddit. Most recently, Paypal have joined up with three Bitcoin payment processors to enable sellers of digital goods in North America to receive payments in bitcoins.

Legal Implications

As Bitcoin’s use has increased exponentially since it was first created in 2009 it has become increasingly clear that governments, regulators and tax authorities are struggling to place it in an existing legislative framework. Different countries are dealing with the issue in a range of ways however for the purpose of this brief the focus will be on the UK

The UK’s position on cryptocurrencies such as Bitcoin to date can be described as ambiguous at best. However as a global centre for financial services this has not stopped cryptocurrencies from joining the UK market.

There are three main areas of regulation which apply to cryptocurrencies; taxation, money laundering and consumer protection.


On 3 March 2014 HMRC issued a provisional brief setting out its position on the tax treatment of cryptocurrencies. This brief sets the ‘mining’ or creation of bitcoins outside the scope of VAT. However, the treatment of bitcoins for corporation, income or capital gains tax purposes will generally follow the normal rules although this will be decided on a case by case basis depending on the parties and activities involved.

Money Laundering

Bitcoin businesses in the UK are, at present, under no obligation to conduct money laundering checks for any transactions completed using bitcoins.

Consumer Protection

The Financial Conduct Authority (FCA) has so far yet to make a decision on how, if at all, Bitcoin should be regulated. However, in June 2014 it announced that it would be launching a new project, Project Innovate, which will look at ways of ensuring that positive new developments such as Bitcoin are properly overseen by the FCA. Project Innovate is due to publish a report in Autumn 2014. Currently the position remains that any Bitcoin businesses in the UK are not registered or regulated by the FCA and as such there are no standard rules or guidance for businesses using Bitcoin.

What next?

It is clear that there is still a huge degree of uncertainty about Bitcoin, in particular whether it is to be treated as a currency, commodity, payment protocol or something else and how it should be regulated.  It would seem unlikely that more traditional businesses will choose to adopt bitcoins as a payment method until greater clarity is achieved. However given Bitcoin’s rapid rise so far and with international businesses such as PayPal beginning to accept it, this may not be too far off.

If you would like advice or information regarding the issues raised in this article or any other Commercial Law matter please contact:

Eleanor Markey
Eleanor Markey
Tel: 0151 600 3122
Email Eleanor

Intellectual Property Act 2014 - we summarise the key changes

Friday 10th October 2014

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Insight - Commercial Law Update - Issue 5

The Hargreaves Review of Intellectual Property and Growth (2011) and the Gowers Review (2005) suggest a number of changes to UK intellectual property law, including new exceptions to copyright law as discussed in our previous article.

The Intellectual Property Act 2014 implements some more of the reforms suggested in the Hargreaves Review with the stated aim of modernising and simplifying intellectual property (IP) law to encourage innovation and growth and support businesses, particularly SMEs.

The IP Act 2014 includes a number of measures, many of which are a consolidation of existing laws and practices, and focusses on patents and design rights in particular.  This article aims to summarise the main implementations.

Design Rights

  1. Blatant (exact, or immaterially different) infringement of a UK or Community (European) registered design right can now be a criminal offence, in certain circumstances where it is intentional and the infringer “knows or has reason to believe that the design is a registered right.”  This brings the law more into line with existing UK copyright law, for which there is also a criminal offence. It is punishable by a fine and up to 10 years imprisonment. This criminal offence appears to use a higher test than the current civil offence of infringement where an infringer is one who uses a design that does not give a “different overall impression”.

    Rights holders are recommended to register their rights and ensure that they have notifications of these rights on the products or packaging making it difficult for infringers to plead ignorance.
  2. For commissioned designs, the first owner of a design will be the designer, unless a contract provides otherwise.  Previously the first owner had been the commissioner.  This change brings design law into line with copyright law which addresses a complexity that exists in the present law.

    Designers and commissioners are recommended to always have clear contracts in place identifying the owners of any subsisting IP.
  3. Certain acts, including those done for teaching, privately or for experimentation, will now be exempt from unregistered design right infringement.  This again brings the law more into line with existing UK copyright law and harmonises with the EU system.
  4. Those who have permission to use registered Community designs can now not be sued for copyright infringement of the respective design.  This aligns the law with the existing law on UK registered designs and is less complex and fairer than the existing law.
  5. Third parties who are already using a design that is subsequently registered will be allowed to continue to use the design.  This means that those who have made investments in good faith are not at risk.  This aligns design law with patent law in relation to this issue.

Patent Rights

  1. The Act allows the European Unified Patent Court to be implemented.  Each House of Parliament will need to approve the order before it is brought into effect. We refer to our article on the unitary patent for further information.
  2. While there is no obligation to, patent owners often mark their products with the patent number to provide public notice of their rights.  Under the Act owners will be able to mark a patented product with a web address that contains the relevant information. This will avoid the need to change information on products such as the relevant numbers and when as patents are granted, revoked or foreign-filed.
  3. The IPO will be able to give non-binding opinions on a wider range of patent validity issues and will be able to revoke clearly invalid patents on all invalidity grounds.  As well as on lack of novelty or inventive step, the IPO will therefore now be able to opine on non-entitlement, insufficient disclosure and cases where the subject matter extends beyond the disclosure.  This is designed to help to focus any litigation and reduce the burden that affected parties have when dealing with invalid patents.

Many of the above changes are intended to make the law simpler and clearer by bringing the current laws in line with EU law and existing UK laws on other forms of IP protection.

It is not clear at this stage what effect the above changes will have in practice.  These provisions are due to be implemented on 01 October 2014.  It will become known after this date what practical effect (if any) the changes have, in particular the criminal penalties for design right infringement.

In the short term, however, changes in legislation generally tend to generate complexities as the intricacies of the changes may be subject to debate and argument.

There are a number of additional changes to the law which are envisaged to come into effect in 2015 or later which have not been discussed here, including the provision for the electronic inspection of documents and the introduction of a Designs Opinion Service.

If you would like advice or information regarding the issues raised in this article or any other Commercial Law matter please contact:

Hayley Hall
Hayley Hall

Intellectual Property Executive
Tel: 0151 600 3466
Email Hayley


Looking at... Personal data - Trade Mark infringement - Price of a contract

Friday 10th October 2014

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Insight - Commercial Law Update - Issue 5

Did You Know?
  • If you wish to use someone’s personal data for unsolicited marketing purposes via email, fax, telephone or SMS you need his/her explicit consent to do so via an appropriately worded opt-in. It is not sufficient to rely on that person failing to opt-out by ticking a box or other means. Bear this in mind when collecting personal data which you may wish to use for marketing purposes.
  •  Case law has confirmed that a registered European Community Trade Mark (CTM) cannot be used as a defence to infringement of an earlier registered CTM. Conversely in the UK, a registered UK trade mark can be used as a defence to infringement of an earlier registered UK trade mark. Accordingly, it would be necessary for the later UK trade mark to be cancelled before a successful infringement claim could be made.
  • The price of a contract is normally an essential term of the contract; a contract lacking certainty on this point may well be invalid. However, if a contract includes an agreed process for negotiating the price (particularly if it is in a range and the minimum and maximum price are set out), or a process for identifying a reasonable sum for payment, preferably by a certain date with recourse to expert determination the contract may be sufficiently certain to ensure a valid contract. However this will depend on the contract at hand and should be reviewed by a solicitor to ensure your contract is legally binding.

If you would like discuss any Commercial Law matter you may have please contact:

Michael Winder
Tel: 0151 600 3085
Email Michael

Which is Best? Best or Reasonable Endeavours?

Friday 10th October 2014

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Insight - Commercial Law Update - Issue 5

Read a commercial contract and you will frequently find that in addition to an absolute obligation to do something (“Party 1 shall…” or “Party 1 will not…”) a party to a contract is often required to use their ‘reasonable endeavours’ or ‘best endeavours’ to achieve a certain contractual objective. It is clear that both phrases are less than an absolute obligation, but what is the expectation of reasonable endeavours and best endeavours and how much are you required to do to comply with such a requirement in a contract?

Best Endeavours

The Courts have been required to consider what “best endeavours” means on several occasions.  The Courts have made it clear that a best endeavours clause is not to be considered as ‘second-best’ to an absolute obligation.  The Court considers the phrase ‘means what the words say’, that is, a contracting party under such an obligation must endeavour to take all those steps in their power which are capable of producing the required results. Such steps are those which a ‘prudent, determined and reasonable obligee, acting in his own interests and desiring to achieve that result, would take’.

Reasonable Endeavours

Whether a party has met a reasonable endeavours obligation is slightly more subjective and involves that party ‘balancing the weight of their contractual obligation’ to the other contracting party against all relevant commercial considerations. Such relevant commercial considerations would include its relations with third parties, its reputation and the cost of such a course of action.

When considering the issue of reasonable endeavours, the Courts have suggested that a reasonable endeavours clause would only require a party to take one reasonable course of action to fulfil its obligation under a contract, rather than many courses of action required by a best endeavours obligation.

Best v Reasonable

In light of the above, a best endeavours obligation is more certain than its reasonable endeavours counterpart. Having said that, neither phrase offers a clear-cut definition of what is required and so expectations of a contracting party who must use their ‘reasonable’ or ‘best’ endeavours cannot always be ascertained. Indeed, whilst using your best endeavours clearly places a higher burden on the party subject to the obligation than simply using their reasonable endeavours, the less tangible nature of the latter potentially creates a higher risk of non-performance.

A recent Court decision stated that it was down to the nature and terms of the contract in question to ascertain the level of expenditure and regard to the commercial interests of a party that would be required as part of fulfilling an endeavours clause in a contract. Trying to achieve a qualified contractual obligation under a contract using your best endeavours will likely require significantly more expenditure in comparison to using reasonable endeavours to fulfil the same obligation.

With all this in mind, it is best practice to outline as precisely as possible the objective of the clause in question and what explicit steps must be taken in order for the party to fulfil that objective when drafting a contract. The clearest course of action is to use absolute obligations (“Party 1 shall…”, etc) as much as possible, then the obligation and standard of performance is clear.

Only where absolute compliance with an obligation is impossible, unlikely or undesirable should an endeavours clause be used.  Even then the objective and the steps required should be made as clear as possible to provide certainty as to what the obligation requires of the obliged party. This will protect such a clause from failing for lack of certainty and becoming unenforceable. Always consider however that where a contract stipulates the actual steps required to fulfil an endeavours obligation, all of the particular steps set out in the contract must be fulfilled regardless of the present commercial considerations of the party, which is of particular importance when under a reasonable endeavours obligation where the commercial considerations of the party seem to carry more weight.

In Summary

There can be uncertainty as to what an endeavours clause may actually require of a party in a given contract. These uncertainties are best resolved with drafting of ‘objective yardsticks’ so as to not over-obligate (or indeed, under-obligate) a party against their commercial interests.

As the party benefitting from an obligation, an absolute obligation or a best endeavours clause will be preferable as there will be a high requirement for the obligation to be satisfied by the other party to the contract.  For the party subject to the obligation, while they would also benefit at times from a clear, absolute obligation, alternatively it may be more likely that they would benefit from the lower level of obligation imposed by a reasonable endeavours obligation, although this may come with its own issues.

If you would like advice or information regarding the issues raised in this article or any other Commercial Law matter please contact:

Michael Winder
Tel: 0151 600 3085
Email Michael

Insight - Issue 4 June 2014

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Insight - Issue 3 March 2014

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Insight - Issue 2 November 2013

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Insight – Issue 1 July 2013

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