Event Report – SCL Digital Media Group Masterclass 2022

February 3, 2023

As the Chair, Benson Egwuonwu (Associate; DAC Beachcroft), made clear at the start of the event digital media, turbo-charged by the pandemic lockdowns, is now everywhere and therefore of priority importance to professionals. This meant the recent masterclass felt timely, especially in the context of nascent technologies, their burgeoning markets (e.g. NFTs) and incoming legal reform. The afternoon’s talks addressed some of the biggest concerns to enterprises and the professionals that advise them, in the digital media space.

Update on the Online Safety Bill

Rupert Cowper-Coles (Partner; RPC) outlined the background to the Online Safety Bill reviewing the current legal regimes dealing with online content (e.g. defamation, privacy law, protection from harassment, criminal offences under the Communications Acts) and, on the other hand, the liability regimes favourable to intermediaries such as internet platforms, which have allowed for the web to grow organically: (in the US) s.230 Communications Decency Act, (in the EU) the E-Commerce Directive 2000/31/EC and (in the UK) the Electronic Commerce (EC Directive) Regulations 2002.

Since the event, and as forewarned by Rupert, the UK government has dropped perhaps the most controversial part of the bill: the ability to force internet companies to take down “legal but harmful” content, appeasing privacy advocates and tech companies who had lobbied intensely for its removal. Nevertheless, the combination of new duties contained in the Bill mean that internet platforms will be expected to monitor their published content much more thoroughly, for any potential for content to be harmful to adults as well as children; for example, pornographic content, bullying content, as well as content which encourages suicide.

Converged Content

Marlon Cohen (Senior Associate; RPC) took a sweeping look at rapid changes to the UK media sector over the last 20 years, before diving into the detail with respect to the Broadcasting White Paper, the Digital Radio and Audio Review and the regulation of video-sharing and on-demand programme services. Marlon explained some of the most interesting parts of the DCMS White Paper, including the revision of “prominence” regulations for public service broadcasters – bringing the principles of prominence into the age of on-demand platforms and services – making large on-demand services subject to a new Video-on-Demand Code similar to the Broadcasting Code. In respect of Channel 4, the government confirmed plans to sell it, following changes in consumer trends (although the government has since rowed-back on this), and BBC finding, reform and terms of trade were also confirmed to be being reviewed.

In terms of digital radio and audio, Marlon noted the dominant consumer trend of live radio decreasing in favour of on-demand consumption, in line with broader media trends. The White Paper’s proposed regulation and deregulation of radio reflect these trends, by mandating DAB in all UK domestic radio devices, strengthening community radio (and removing restrictions on advertising affecting such radio).

In respect of the Audiovisual Media Services Regulations (based on the EU directive), Marlon outlined that they today regulate linear/TV-like services and video sharing, bringing such services in line with the harm rules governing broadcast TV, with regards to enforcement, penalties, suspensions etc. Perhaps the most significant part of the ASMR is the treatment of video sharing platform (“VSP”) services, bringing these into the same regulatory family as on-demand and broadcast TV, with a view to protecting vulnerable persons, such as children, from harmful content.

Notably, the Online Safety Bill is set to repeal this VSP regime, although Ofcom will operate the framework until such time it is no longer in force.

NFTs and IP, and related disputes

Marc Lisner and Sara Sefton (Associates at Bristows) outlined the practical issues and challenges arising from the application of intellectual property applied to NFTs (or non-fungible tokens). Marc and Sara first explained how to register a trade mark and how to infringe a trademark, emphasising the myriad potential issues with enforcing such registered rights in respect of virtual goods – are virtual goods identical to non-virtual gods? And how are the related legal tests related to the course of trade, relevant territory, reputation and goodwill to be applied in a virtual environment, perhaps in the metaverse? Acknowledging that there is a lack of hard precedent in this area, Marc and Sara were clear that there appear to be more questions than answers here.

Making clear that there is a distinction between the NFT itself and the content it’s linked to, Marc suggested that the original and unique code within the blockchain forming the NFT may be able to attract copyright. The content, usually a distinct subject matter, will also be able to attract copyright, as graphical or musical content. Divisions of ownership between the NFT and the media attached to it – the latter being that which is perceived to be value-generative by consumers – are conceivable. Indeed, the process of linking via the NFT to the media and content, may be tantamount to a communication to the public and therefore potentially copyright infringement test the party linking the content has obtained licence from the rights holder.

Lizzie Williams (Senior Associate; Harbottle & Lewis) got to the crux of the matter, showing us the code which people are referring to when they talk about “NFTs”. Importantly (citing the Law Commission’s definition of smart legal contracts), the content of the smart contract is determinative of the content of the NFT and some or all of the applicable contract provisions, and therefore that there may have been incorporated (in a contract between a transferor and transferee) natural language terms sitting ‘off-chain’. Common causes of NFT disputes, however, stretch from IPR infringement, misrepresentations, fraud, and errors in code – as well as drafting issues, such as conflicting provisions. Clearly, there’s broad scope for differences in expectations, particularly in the consumer space, where the courts have been clear that the Consumer Rights Act (2015) applies to this type of virtual commercial activity. Interestingly, Lizzie noted, amongst the usual range of dispute resolution options (e.g. arbitration), there are bespoke on-chain procedures and the Digital Dispute Resolution Rules (published by the UK Jurisdiction Taskforce) which use tools and powers designed specifically for the idiosyncrasies of NFT marketplaces and the risks accompanying trading within them.

Case law roundup

Hope Williams (Barrister at 5RB) talked us through some important recent cases in the areas of social media, and in particular liability for third party comments and key themes in social media libel claims, as well as responses to cyberattacks.

In terms of social media and liability for third party comments, Hope talked us through the Australian case of Fairfax Media Pty Ltd v Ors v Voller [2021], contrasting it with the English case of Tamiz v Google Inc [2013]. The Australian case established the position that media organisations are liable for defamatory comments left by third parties, insofar as there was a facilitation (such as an invitation or encouragement to publish) of such commentary by, for example, a media organisation running a Facebook page.

Other 2022 cases, Banks v Cadwalladr and Sivanathan v Vasikaran, clarified, respectively, that TED talks are not to be treated as equivalent to social media posts (for the purposes of defamation) and that, in respect of a Whatsapp thread, considering meaning in context means considering the timing intervals between the messages (and not necessarily the entirety of a conversation/thread).

In terms of responding to cyberattacks, Hope examined cases from the perspective of both the targeted organisation and its customers. In Warren v DSG [2021] and Smith v TalkTalk [2022], the court struck out claims from the customer, save for those based on breaches of privacy law obligations to implement technical and organisational measures, where a third party (e.g. hacker) creates a vulnerability which then leads to breaches of data protection principles/negligence by the targeted organisation. Following Ince v Persons Unknown [2022], where the claimant is the organisations (as victim), the relevant claim is a breach of confidence, allowing the organisation to base its claim on the confidential information of third parties, (namely its customers).

To sum-up

There are broader themes at work, linking each of the event’s presentations. It’s now hard to deny the necessarily reactive nature of legislators and judicial systems to technological developments and accompanying risks, where getting on the front-foot seems to be increasingly impossible given the sheer pace of change in technologies and consumer trends. Whilst some (such as the UK Jurisdiction Taskforce) would argue that this makes English common law optimally placed to govern (via judge-made law based on analogies with older cases/older technological settings), it’s hard to conclude that this is the best of all possible worlds for all people. Recent mass consumer frauds (see FTX) mean that whilst the exciting new global markets and industries may leverage new technologies they cannot do away with the told psychologies and the need for the humdrum work of the law maker’s checks and balances.

The SCL Digital Media Masterclass took place on the 8 November 2022 and is available to watch on scl.org.

Gerald Brent

Gerald Brent is an associate in the Commercial team at Addleshaw Goddard, advising on data protection and IP issues.