This Week’s Techlaw News Round-up

June 23, 2023

UK law

High Court sets FRAND rates in Apple v Optis case

Many SCL readers will be aware that Apple and Optis have been engaged in international litigation concerning Standard Essential Patents (SEPs) for some time. The High Court has ruled in Optis Cellular Technology LLC and others v Apple Retail UK Ltd and others [2023] EWHC 1095 (Ch). The judgment is the second on fair, reasonable, and non-discriminatory (FRAND) licences following the UK Supreme Court’s ruling in Unwired Planet v Huawei back in 2020 and the High Court’s ruling in InterDigital v Lenovo earlier this year. Following the usual arguments in other trials about whether the SEPs concerned were valid, infringed and essential, the court was asked to deal with the licensing issues. The judgment sets out a detailed analysis about the importance of comparable. It also considers Apple’s lump sum approach versus Optis’ ad valorem approach. The court concluded that comparable can be a key factor in determining appropriate FRAND licence rates and that a lump sum rate is preferable to an ad valorem rate. The judge also considered the significance of the expert evidence. He decided that a FRAND licence to Apple for the portfolio was a lump sum licence, with the total sum payable by Apple being US$56.43m plus interest.

Review on pro-innovation regulation for creative industries published

HM Treasury has published Professor Dame Angela McLean’s review on pro-innovation regulation for the creative industries and the government response. The report provides recommendations to promote growth and innovation in the creative industries including specific suggestions for sub-sectors including video games, advertising, live performance, and fashion, where clear regulatory opportunities have been identified from engagement with industry. The government’s response accepts Dame Angela’s recommendations and sets out how these will be implemented. The report notes the recommendation in the Pro-innovation regulation of technologies review that the government should announce a clear policy position on the relationship between IP law and generative AI to provide confidence to innovators and investors. The government response confirmed that a code of practice would be developed to enable AI innovators and the creative industries to grow together in partnership, allowing AI firms to access copyrighted work as an input to their models, while ensuring that there are appropriate protections in place to support the rights of holders of copyrighted work.

CMA clears Amazon’s purchase of maker of Roomba robot vacuum cleaners

The CMA has cleared Amazon’s $1.7 billion purchase of iRobot. iRobot designs and builds consumer robots, including robot vacuum cleaners sold under the “Roomba” brand. The CMA considered three areas of potential concern: whether Amazon could enter to compete as a supplier of robot vacuum cleaners if the merger did not go ahead, and whether this loss of potential competition, due to the merger, would be substantial; whether Amazon could use its online store, which currently accounts for the majority of sales of robot vacuum cleaners in the UK, to disadvantage iRobot’s rivals following the merger; and whether iRobot vacuum cleaners could be an important input for “smart home” platforms, and whether Amazon could disadvantage its smart home rivals following the merger as a result. The CMA has now concluded that the deal would not lead to competition concerns in the UK. It found that iRobot’s market position is modest and there are significant rivals. Therefore, the loss of potential competition from Amazon would not have a substantial impact on market outcomes. It also said that although Amazon could use its position as a major retailer to disadvantage rival robot vacuum cleaner manufacturers, it would lack the incentive to do so. It said the benefits of such a strategy would be limited, as the UK market for robot vacuum cleaners is small (and not expected to grow significantly in the future) and of limited strategic importance. So, pursuing this strategy would have significant costs for Amazon (including from lost sales commission and reduced advertising revenues). Finally, it found that the acquisition of iRobot would not disadvantage Amazon’s rival “smart home” platforms. This is primarily because robot vacuum cleaners (and the data that they gather) are generally not considered to be an important input to the emerging “smart home” market in the UK. The CMA also said that there are several alternative robot vacuum cleaners with similar capabilities to iRobot that could form part of rival “smart home” offerings. The deal remains under regulatory review in other jurisdictions.

Ofcom publishes update on preparations for online safety regulation

Ofcom has published an update on how it is preventing to regulate online safety. It plans to employ a phased approach to codes and guidance consultations. Its previous working assumption was Royal Assent in early 2023. That is now likely to be Autumn 2023, and it plans to publish the codes very shortly after commencement, which will set out measures that regulated services can take to mitigate the risk of illegal harm. It will also publish a register of risks relating to illegal content, and risk profiles of service characteristics that its assessment has found to be associated with heightened risk of harm; draft guidance to services on how to conduct their own risk assessments and on how services can identify illegal content; draft guidance on record keeping; and Ofcom’s draft enforcement guidelines. Child protection duties will be set out in two parts. First, online pornography services and other interested stakeholders will be able to read and respond to its draft guidance on age assurance from Autumn 2023 (subject to the final shape of the Bill and the timing of Royal Assent). Secondly, regulated services and other interested stakeholders will be able to read and respond to draft codes of practice relating to protection of children, around six months after Ofcom’s powers commence. It also expects to consult on transparency guidance in the period between Royal Assent and Ofcom finalising the register of services, to allow it to launch the transparency regime as soon as possible. It will then consult on the remaining codes and guidance after the register is published. It will publish a further call for evidence in Autumn 2023 on the duties that apply to categorised services.

EU law

European Commission announces next steps on cybersecurity of 5G

EU member states, along with the European Commission and ENISA, the EU Agency for Cybersecurity, have published a second progress report on the implementation of the EU Toolbox on 5G cybersecurity. The report also addresses some of the recommendations of the European Court of Auditor’s Special Report of January 2022. In addition, the Commission also adopted a Communication on the implementation of the toolbox by member states and in the EU’s own corporate communications and funding activities. The Commission emphasises in its Communication its deep concerns about the risks posed by certain suppliers of mobile network communications equipment to the security of the EU. The Commission considers that decisions adopted by member states to restrict or exclude Huawei and ZTE from 5G networks are justified and comply with the 5G Toolbox. The Commission considers that Huawei and ZTE represent materially higher risks than other 5G suppliers.

European Commission consults about DSA transparency database

The European Commission is consulting about the Digital Services Act transparency database. Article 24(5) of the DSA states that “providers of online platforms shall, without undue delay, submit to the Commission the decisions and the statements of reasons referred to in Article 17(1) for the inclusion in a publicly accessible machine-readable database managed by the Commission”. The Commission has designed a DSA Transparency Database. It is now consulting on the precise way this obligation should be implemented, including the information to be collected, the methods for submission of statements of reasons, and the tools of access for the public. The consultation ends on 17 July 2023.

European Media Freedom Act: Council secures mandate for negotiations

EU member state ambassadors have agreed the Council’s position on a new law to safeguard media freedom, pluralism and independence in the EU. The European Media Freedom Act (EMFA) will establish a common framework for media services in the EU internal market and introduce measures aimed at protecting journalists and media providers from political interference while also making it easier for them to operate across the EU’s internal borders. Among other things, it sets out provisions to strengthen the protection of journalists and journalistic sources and limits the use of coercive measures such as deployment of spyware for the purpose of obtaining such information; and sets out provisions to strengthen the protection of journalists and journalistic sources and limits the use of coercive measures such as deployment of spyware for the purpose of obtaining such information.

BEREC publishes reports on AI in telecommunications sector

The Body of European Regulators for Electronic Communications (BEREC) has published a report on the impact of AI systems in the telecommunications sector. Although most AI systems in the telecommunications sector are still in a development phase, AI is expected to play an important role in the sector in the mid-term. The BEREC report seeks to identify these developments in selected use cases, to assess if those use cases may have an impact on regulation, and to raise further awareness of the different use cases as well as the benefits and risks of opportunities regarding the application of AI in the sector. Since 2017, the European institutions have intensified their attention on AI, fostering its development while ensuring that EU values and individuals’ rights are preserved. BEREC notes the AI Act discussions and the complementary draft AI Liability Directive.

Norwegian consumer body publishes report on impact of generative AI on consumers

The Norwegian consumer body Forbrukerrådet has issued a report on the impact of generative AI on consumers. The report tackles current and emerging challenges, risks, and harms of generative AI, provides an overview of the patchwork of relevant existing and upcoming rules and regulations, and sets out various recommendations on how to address the problematic issues of the technology. Alongside the report, the European consumer group BEUC has called on regulators to take urgent action on generative AI.

Coimisiún na Meán sets out plans to enhance online safety and to regulate and support Irish media sector

Coimisiún na Meán, Ireland’s new media regulator and media development agency, has set out its work programme for the coming nine months. Online service providers will have legally binding obligations to take steps that make the Internet safer for everyone. Regulation will be extended to cover on-demand services, as well as traditional TV, reflecting significant changes in viewing habits in recent years support for the wider media sector will be extended, with funding schemes for local journalism, a review of Irish language services, and a strategy to promote gender, equality, diversity and inclusion in the media. The organisation will grow from around 50 staff at present to approximately 160 in the first phase of growth. The work programme runs until next February, when it will begin enforcing the EU’s Digital Services Act in addition to the functions it already has under the Broadcasting Act 2009 and the Online Safety and Media Regulations Act 2022.