IN THIS ISSUE
Old guard go in AIM secondary buyout - Nominet looking for experts - New media law news in brief - US Legal technology news - The M&S newspaper clippings case - Law firm warns of covert technology danger - California Bar says web sites are ethical - Next issue - 26.07.2001

OLD GUARD GO IN AIM SECONDARY BUYOUT
Dunedin Capital Partners Limited and Albany Venture Managers have backed the secondary buyout of AIM Holdings Limited, the Yorkshire-based legal systems supplier.

AIM's original MBO in 1987 was backed by Dunedin, who together with Albany went on to invest a second tranche of development funding in 1992 before backing this secondary buyout. The secondary buyout provides an exit for a number of ex-management shareholders - including David Hewitt and Clive Telfer - and increases the level of institutional backing by Dunedin and Albany for supporting the future growth of the business. The existing executive management team - including Jim Chase, Anne Mansfield and Steve Broadley - will remain in place, as does Mike Booth who continues in his role as deputy chairman. In addition, the secondary buyout will be followed up with the recruitment of a new chairman and chief executive who will focus on growing the business organically and by acquisition.

Ross Marshall, managing director of Dunedin, commented: "We are pleased to be able to continue to support AIM. The transaction represents an opportunity to both support and strengthen the management in a profitable software company, to ensure the continued success of the business in its next phase of growth."

NOMINET LOOKING FOR EXPERTS
Do you think you are an expert? Independent, clear thinking and internet-savvy individuals are being sought by the UK national domain name registry Nominet UK to join its team of dispute resolution experts.

Following the revision of its dispute resolution service, Nominet is recruiting up to 30 independent experts to decide on cases where mediation has failed to bring about a resolution. Candidates must have a general knowledge of domain name issues as well as experience of working on disputes. A legal background would be useful but is not obligatory. A fixed fee of £750 is offered per case. Applicants are invited to send their CV with a covering letter to Sharon Barwood at Nominet UK, Sandford Gate, Sandy Lane West, Oxford OX4 6LB or by email to recruitment@nominet.org.uk

NEW MEDIA LAW NEWS IN BRIEF
RUSSIAN CRYPTO EXPERT ARRESTED - The FBI arrested Dmitry Sklyarov, a Russian encryption expert at his hotel in Las Vegas for publishing software that breaks the security of most major e-book formats and thus, according to the bureau, violates the Digital Millennium Copyright Act. The FBI made the arrest on Tuesday, the day after the Sklyarov outlined the problems weaknesses in e-book formats and Adobe PDF at the Def Con hacking conference.

SHREK TO BECOME E-BOOK - SealedMedia, the UK provider of digital rights management software, has one a deal from TimeWarner affiliate ipicturebooks.com to use its DRM technology to 'seal' the copyright content of their multimedia e-books for children. Among the first e-books sealed will be interactive, animated activity books based on the Dreamworks movie Shrek.

DEADLINES SET FOR NAPSTER APPEAL - The US 9th Circuit Court of Appeals has given Napster until August 9 to appeal against last week's order by Judge Marilyn Hall Patel, which effectively shut down the music file swapping service. The music industry body RIAA has until September 6 to file a response and Napster then has until September 20 to file a follow-up response. As the Court of Appeals is unlikely to issue a ruling until all the briefs are filed, this could mean Napster will be offline until at least the end of September.

FRENCH ANTI-RACIST CASE FAILS - The French anti-racism group J'Accuse has failed in a Paris court action to force French ISPs, including French Telecom and AOL France, to prevent French internet users from accessing Front14.org, a US web portal that includes neo-Nazi and racist statements. J'Accuse was founded by Marc Knobel, a member of French anti-racism group LICRA who last year helped orchestrate the French lawsuit against Yahoo!

NEW MEXICO DROPS OUT OF MICROSOFT CASE - Amid as yet unconfirmed reports that Microsoft has approached the US Justice to discuss a possible settlement of the long running antitrust suit, Microsoft has independently settled its antitrust case with New Mexico, eliminating one of the 19 states participating with the Justice Department in the lawsuit. As part of the agreement to drop the case, New Mexico will receive reimbursement from Microsoft for legal fees and other costs incurred during the case and "the benefit of any and all remedies imposed on Microsoft in the resolution of this lawsuit with any and all of the remaining litigating states and the US Department of Justice."

ONLINE GAMBLING ON THE WAY FOR UK - Sir Alan Budd has delivered his review of gambling legislation to the British government. The 260 page document contains extensive proposals for the liberalisation of gambling regulations within the UK, including a recommendation that online gambling is legalised - at the moment online gambling is conducted via offshore operations. The Department of Culture, Media & Sport has opened a public consultation on the report, which will run until the end of October, and the government is expected to publish its recommendation next year.

WEBCASTERS ALLOWED TO TAKE PART IN ARBITRATION - The US Copyright Office has allowed a number of US webcasters, including MTVi and MusicMatch which both run online radio-like music request services, to be included in the ongoing arbitration with the Recording Industry Association of America (RIAA) over the size of royalty payments for music webcasts. The Copyright Office is handling the arbitration and there had been speculation that, because the RIAA is already suing a number of webcasters for copyright infringement, that these companies might be excluded from the arbitration.

US LEGAL TECHNOLOGY NEWS
iMANAGE NOTCHES UP MORE SALES - iManage, the document and content management software supplier, has notched up two more major sales. One is with leading California law firm Sheppard Mullin Richter & Hampton, while the other is with Pinheiro Neto, the largest law firm in South America. The firm, which is headquartered in Sao Paulo, with offices in Rio de Janeiro, Brasilia and London, is also a founder member of the international law firm organisation Club de Abogados.

LAWTRAC GOES ONLINE - US matter and case management software developer Lawtrac, the company specialises in systems for in-house legal departments, has just launched Lawtrac Online. This a new system, that can be used via the internet or as a corporate intranet solution, providing online access to current matter data, financial reports, documents, calendar information and messages. It is interesting to note that Solicitec, the first UK supplier to offer this kind of functionality, began shipping its Solcase Online system as long ago as January 1998.

SAGE LAUNCH CARPE DIEM V.4 - Sage US has launched a major upgrade, Version 4.0, to its Carpe Diem electronic time sheet product. Enhancements include improved synchronisation for mobile users, a favourites list of recently used validation records and changes to the user interface so the web based version of Carpe Diem has a similiar look and feel to the Windows version. Sage say this will make it easier for users to switch between the two versions.

ELECTRONIC DISCOVERY ADVICE - US litigation support specialist Applied Discovery has launched an electronic discovery resource centre on its web site. Along with information about e-discovery services and solutions, the centre contains an extensive library of white papers, articles and case reports. Topics covered include e-discovery cost sharing, electronic evidence spoliation, acceptable forms of production of electronic evidence, and electronic document retention policies. www.applieddiscovery.com

THE M&S NEWSPAPER CLIPPINGS CASE
Last week saw the House of Lords deliver its judgment in the Newspaper Licensing Agency -v- Marks & Spencer case. Although strictly speaking this is an old rather than new media case, looking at the copyright issues surrounding newspaper press clippings, it provides an interesting insight into the law protecting newspaper typographical arrangements. We are grateful to Louis Joseph, the head of intellectual property at London law firm Kaltons for providing this commentary...

When a newspaper is published, various copyrights may arise simultaneously under the Copyright, Designs and Patents Act 1988 (CDPA). For example: Each newspaper article is a literary work, provided it is original. Each drawing or photograph in a newspaper is artistic work, provided it is original. Each typographical arrangement of a newspaper grants the publisher copyright in it.

In the House of Lords judgment in Newspaper Licensing Agency Limited -v- Marks & Spencer plc [2001] UKHL 38 (12 July 2001), Lord Hoffman gave a thorough review of the last (copyright in typographical arrangements in newspapers) which is bound to interest those in the publishing industry.

The Facts - Marks & Spencer (M&S) bought press cuttings from an agency on a daily basis. That agency paid a fee to the National Licensing Agency Limited (NLA) (which deals with copyright licensing on behalf of newspapers) for a licence to copy the cuttings. M&S, in turn, made further copies of the cuttings for internal distribution. Typically, the agency would rearrange the text to fit onto A4 sheets, so altering the original typographical arrangements. M&S had no licence to make further copies and, accordingly, NLA sued for copyright infringement in the typographical arrangement of the newspapers involved.

The House of Lords had to decide whether M&S had copied the whole or a substantial part of the typographical arrangements.

What Does Typographical Arrangement Copyright Protect? - In answering this question, the Court had to ascertain what "published" meant. Lord Hoffman concluded that it meant the publication of a substantial part of a newspaper and not of "each of the literary works comprised in the newspaper". In other words, the copyright in typographical arrangements in newspapers does not protect each article, drawing or photograph (these are protected by other types of copyrights), but their "presentation and layout". So, this type of copyright protects the skill and labour devoted to a typographical arrangement which is expressed in the overall design and not the individual articles by themselves.

Accordingly, Lord Hoffman observed: "I find it difficult to think of the skill and labour which has gone into the typographical arrangement of a newspaper being expressed in anything less than a full page." So, protection is given to the combination of a particular typeface, the precise number or width of the columns, the breadth of margins and the relationship of headlines and strap lines to the other text, the number of articles on a page and the distribution of photographs and advertisements which go into pages and which give the newspaper as a whole its distinctive look.

The Decision - Typically, the agency gave M&S A4 sheets into which articles were made to fit, so they did not reproduce the lay out of any page sufficiently to amount to a substantial part of its typographical arrangement. M&S had not reproduced anything to be regarded as either resembling the newspaper concerned or having newspaper-like qualities. The Court therefore held that there was no infringement of the copyright of NLA by M&S.

The Judgment's Significance - This judgment is of significance to the publishing industry because it clearly sets out the limits of copyright in typographical arrangements in newspapers. So long as you do not reproduce the layout of a newspaper page itself, there is no infringement. That is to say, you do not reproduce anything that could be regarded as either resembling the newspaper concerned or having newspaper-like qualities. Be that as it may, it is important to note that this decision only applies to the copyright in typographical arrangements in published editions (like newspapers) and not literary or artistic copyrights in individual articles, drawings or photographs.

LAW FIRM WARNS OF COVERT TECHNOLOGY DANGER
Andrew Rigby of UK law firm Tarlo Lyons has issued a warning that businesses are facing the prospect of increased liability and potentially legal action for the use of covert technologies when the first transitional period under the UK Data Protection Act 1998 comes to an end in October 2001. Such technologies collect personal data from web site users without their knowledge.

Increasingly, says Rigby, businesses that do not wholly understand the obligations imposed on them under data protection laws, are asking third parties to host and maintain content on their web sites. They are often unaware of the use of covert technology on the site, which gathers data on visitors to web sites through the use of datamining and profiling technologies, cookies and active content.

A cookie can build up a profile by using the cookie data with other data (like browser chattering and invisible hyperlinks), to ascertain the identity of an individual, the country in which they live, the internet domain to which they belong, the turnover and size of the company employing the internet user, the function and position of the surfer within the company and the types of web sites they visit. Active content may also allow a web site to retrieve the email addresses of visitors to the site.

In most cases this type of covert technology raises obligations on the web site owner to ensure that it complies with data protection laws, particularly regarding obligations to:

(a) advise the visitor that cookies or active content are being used
(b) obtain the visitor's consent to processing
(c) inform the visitor of the type of data that is being collected
(d) notify the visitor of the use to which that data is being put
(e) inform the visitor if the data will be used for direct marketing
(f) notify the visitor of his/her right to object to such processing and to "opt-out"

According to Rigby, who is head of e-business & banking technology at Tarlo Lyons: "Some of these obligations are already on web site owners, but are particularly important if covert technologies are being used at the time of surfing, and these simple statements are missing from most web sites. Businesses could therefore face enforcement action in relation to their e-presence and ultimately could face action from data subjects."

Rigby also warns that web sites are not the only type of covert technology. The issue of covert technologies in hardware was raised a few years ago in connection with the Intel Pentium III processor and other types of technologies which contained "ET" software that basically "phoned home" every time a computer went online. RealNetworks has also recently developed programs which do the same thing in relation to downloads of videos and music (post Napster) and phone home, allowing the copyright owner to gather data on subsequent use of the video/music etc.

With the ending of the first transitional period under the UK Data Protection Act 1998 in October of this year, the full effect of the Act will come into force relating to automated data, and clearly e-businesses will come under increasing scrutiny. The Information Commissioner (formerly the Data Protection Registrar) has limited resources and therefore may target businesses on the web because this is relatively inexpensive.

CALIFORNIA BAR SAYS WEB SITES ARE ETHICAL
Law.com has just reported on a new advisory opinion issued by the California State Bar's ethics committee to the effect that while law firm web sites are clearly designed to attract business and aimed at financial gain, they should not be considered "solicitations" that could violate ethical standards. However the opinion also warns that because such web sites are clearly a form of communication with the general public, their content must meet the ethical standards of not being false or misleading.

In the course of the 5 page opinion, which according to Law.com was the result of "months of consideration," the ethics committee argues that "Although email communication as part of web site technology permits faster responses and more interaction than is possible with other forms of written communication, it does not create the risk that the attorney might be able to use her persuasive ability and experience to influence unduly the potential client's thoughtful decision to hire her. The attorney is not the initiator of the communication merely because she includes email facilities in her web site, any more than if she printed her telephone number and email address in a printed advertisement, law directory or telephone book."