WELCOME TO THE April EDITION OF TECHNOL-AG, ADDLESHAW GODDARD'S MONTHLY TECHNOLOGY UPDATE.

European Commission consults on a digital euro

The European Commission has launched a targeted consultation on the prospect of a digital euro to be used as the single currency, concurrently with euro banknotes and coins. The consultation specifically focuses on: users’ needs and expectations for a digital euro; the digital euro’s role for the EU’s retail payments and the digital economy; how a digital euro can be made available for retail use; the impact on the financial sector and financial stability; how the anti-money laundering and counter terrorist financing rules would be applied; the privacy and data protection aspects; and international payments with a digital euro. 

The consultation aims to collect further information from industry experts about users' needs and expectations for a digital euro as well as feedback regarding the anti-money laundering, international payments, privacy and data protection aspects of a digital euro. 

The consultation ends on 14 June 2022.

The European Commission has announced that it is planning to propose a bill for a digital currency in early 2023, which will serve as the digital euro’s legal foundation. A key issue to be considered further is the implications and risks of a digital currency in Europe. If a digital currency is not used as the single currency (i.e. it is not used concurrently with euro banknotes and coins) banks fear that savers could convert their deposits into the central bank-backed digital currency with the click of a button if there is another financial crisis, creating a run on online banks.

Digitalising proceedings

All claims covered by practice direction 51ZB (i.e. almost all damages claims dealt with in the County Court) must now be issued online, via the damages claims portal (DCP) on MyHMCTS. If a claim is now issued in paper form, the court will determine whether it should have been issued online and, if so, what (if any) sanction should be imposed.

DCP users can now: (i) issue and serve proceedings; (ii) acknowledge receipt of the claim; (iii) file a defence and seek a defence extension; (iv) file directions questionnaires; and (v) file proposed directions and upload documents.

The DCP presents challenges to both claimants and defendants. The parties must actively monitor the DCP for updates and key deadlines, which is complicated by the fact that there is currently no integration between the DCP and existing case management systems. Defendants' legal representatives must provide to the Claimant their prior consent to accepting service in the DCP (and be registered for the DCP), otherwise the claim could be transferred out of the DCP. Ultimately, however, the scheme shows a push towards paperless working that (at least in principle) aims to facilitate a more efficient system that can meet the rising demands placed on the courts.

CJEU rules on whether cloud storage of private copies trigger rights under European copyright law

In the case of Austro-Mechana Gesellschaft zur Wahrnehmung mechanisch-musikalischer Urheberrechte Gesellschaft mbH v Strato AG, the Court of Justice of the European Union (CJEU) has ruled on the question of whether the storage of content in the context of cloud computing came within the private copying exception in Article 5(2)(b) of the Copyright Directive (2001/29/EC) (Copyright Directive) and with that, whether the author should be fairly compensated for the cloud storage reproduction in that legislative provision.

The case was referred to the CJEU by the Vienna Higher Regional Court following a demand from Austro-Mechana (a copyright collecting society) for payment of a storage media levy by Strato AG relating to cloud storage space that Strato provides. Austro-Mechana claimed the levy was due as fair compensation under the private copying exception in Austria.  Strato refused the demand for payment, arguing that no remuneration was due in respect of cloud computing services that its users benefit from in Austria and that it had already paid the requisite fee for the storage space it offered in Germany. 

The CJEU ruled that, in relation to the Copyright Directive:

1. "article 5(2)(b) must be interpreted as meaning that the expression ‘reproductions on any medium’, referred to in that provision, covers the saving, for private purposes, of copies of works protected by copyright on a server in which storage space is made available to a user by the provider of a cloud computing service"; and

2. article 5(2)(b) must also be interpreted "as not precluding national legislation that has transposed the exception referred to in that provision and that does not make the providers of storage services in the context of cloud computing subject to the payment of fair compensation in respect of the unauthorised saving of copies of copyright-protected works by natural persons, who are users of those services, for private use and for ends that are neither directly nor indirectly commercial, in so far as that legislation provides for the payment of fair compensation to the rightholders".

The judgment is in line with previous case law and so is unsurprising. However, it is a useful reminder of the fact that the principle of the private copying exception still stands if the specific circumstances deem the copying of a private nature, irrelevant of the technical means by which the private copy has been produced, including the use of cloud storage. 

In addition, the CJEU made it clear that, whilst, in principle, the private user carrying out the copying is liable for the fair compensation, Member States have discretion as to how to determine what "fair compensation" might look like and by whom it must be paid, which in some circumstances, for practical reasons, may mean charging a levy on the service provider which will be passed on to the end users.

NHS pilots new AI tool to forecast A&E admissions

NHS England is set to deploy a new artificial intelligence (AI) forecasting tool to predict accident and emergency (A&E) admissions and help reduce the post-pandemic treatment backlogs. The tool is designed to support decision making on the prioritisation of elective care delivery by predicting when emergency demand levels will likely be reduced, as well as potentially allowing the NHS to predict bed needs, including for elderly or paediatric patients.

This example highlights how AI can be used innovatively to utilise staff and financial resources much more efficiently. It seems inevitable that, as the use of AI to drive efficiencies becomes more intertwined with business models, there will be pressure for publicly funded organisations in particular to be using AI technology to make cost savings and meet targets.

A potentially worthwhile exercise for many companies over the coming years will be exploring areas where their business could benefit from the use of AI to manage resources. This is something particularly evident in the legal sector with our Innovation & Legal Technology team seeing a significant growth in the number of tools and products entering the market. For more information on the tools AG uses and how they can be deployed, feel free to contact us using the details below.

Key case law update: Court of Appeal awards Soteria significant damages in IBM case

Addleshaw Goddard represented Soteria Insurance Limited (formerly CIS General Insurance Limited) in its successful claim against IBM relating to a failed IT transformation project. The Court of Appeal increased the judgment debt against IBM from c. £13m to c. £80.5m (before interest and costs).

The judgment debt is compensation for wasted costs caused by IBM's unlawful termination of a major transformation contract for a new IT platform and IBM's delay pre-termination.

In 2021 the first instance court held that IBM had unlawfully terminated the contract. It also found that IBM was in breach of contract for missing a number of deadlines and awarded damages to compensate for the losses caused by those delays. However, the claim for wasted costs due to IBM's wrongful termination was dismissed on the grounds that it was caught by a clause excluding recovery of loss of profits, revenue and anticipated savings.

The Court of Appeal has now dismissed IBM's arguments that it lawfully terminated the contract and Soteria's losses were not wasted due to the termination but because of a subsequent sale of the company. Crucially the Court of Appeal decided that the clause excluding loss of profits, revenue and anticipated savings did not prevent recovery of wasted costs. 

Susan Garrett, Technology Disputes Partner, who led the AG team along with Lauren Hamilton, said: "The decision will be welcomed by many as this form of exclusion clause is very common and the ability to recover wasted costs is an important right".

The result is a welcome one for businesses procuring IT transformation projects / services from vendors.

Please get in touch with the AG contacts below if you would like to discuss the implications of this case further.

Key Contacts

Susan Garrett

Susan Garrett

Partner, Dispute Resolution
Manchester, UK

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