Are consumer cancellation fees exempt from the requirement to be fair?

Can a consumer successfully challenge an ‘excessive’ cancellation fee under the Consumer Rights Act 2015?

The High Court recently answered this question in Casehub Limited v Wolf Cola Limited. In this case, the defendant (W) sold cloud storage solutions to consumers on its standard terms and conditions. It charged customers a £20 per month subscription fee for a minimum fixed term of 12 months. If the customer terminated the agreement within the minimum term, a cancellation fee was payable, calculated as a lump sum equivalent to the total of the monthly charges remaining during the minimum term less a discount of 10% to reflect early payment by the customer.

Due to system problems, a number of W’s customers were unable to access the service and terminated their agreements within the first month. They were charged a cancellation fee of £196 each in accordance with W’s terms and conditions.

The claimant (C) took assignments from three customers of their claims against W to be refunded the cancellation fees and sued W. C argued that the cancellation fee provisions in the terms and conditions were unlawful. The specific ground of attack was that the provisions were unfair under Part II of the Consumer Rights Act 2015 (CRA).

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Digital Single Market: EU negotiators agree to end unjustified geoblocking

LaptopThe European Commission has issued a press release announcing that the European Parliament, the Council and the Commission have reached a political agreement to end unjustified geoblocking for consumers wishing to buy products or services online within the EU.   Geoblocking occurs when a customer is treated differently based on their nationality, place of residence or location – typically by denying them access to a website.  This means that consumers in one EU member state cannot access certain goods/services available in another EU member state, segmenting the market, limiting cross-border trade and adversely affecting competition.  A survey by the Commission found that in 2015 less than 40% of websites allowed cross-border customers to complete a purchase.  The press release says:

For citizens this means they will be able to buy their new electrical goods online, rent a car or get their concert tickets across borders as they do at home. It will ensure that they no longer face [geographic] barriers such as being asked to pay with a debit or credit card issued in another country. For businesses, this means more legal certainty to operate cross-border.”

Europe

Geoblocking will be made unlawful by means of an EU Regulation which will be automatically binding on each EU member state.  Geoblocking will be permitted where there is objective justification for such a practice.  The Commission’s press release outlines three scenerios where no such justification will be deemed to exist.  These are:

  • The sale of goods without physical delivery – for example, a Belgian customer wishes to buy a refrigerator and finds the best deal on a German website. The customer will be entitled to order the product and collect it at the trader’s premises or otherwise organise delivery himself to his home (without the seller being involved);
  • The sale of electronically supplied services – for example, a Bulgarian consumer wishes to buy hosting services for her website from a Spanish company.  She will have access to the service and will be able to register and buy the service without having to pay additional fees that a Spanish consumer would not have to pay; and
  • The sale of services provided in a specific physical location – for example, an Italian family will be able to buy a trip directly to an amusement park in France from the amusement park’s French website without being redirected to an Italian website.

The Commission makes it clear in its press release that the Regulation will “not impose an obligation to sell and [will] not harmonise prices.  It does, however, address discrimination in access to goods and services in cases where it cannot be objectively justified (e.g. by VAT obligations or different legal requirements).”

The Regulation requires some further approvals  – no timeline has been given for this.  It will then be published in the EU Official Journal and come into force nine months later.  This will give EU organisations the opportunity to adapt their business practices to become Regulation compliant.  We will post a further update when the Regulation is published.

 

 

Giving Defendants a Second Chance: Failure to Assert Improper Venue Prior to TC Heartland is Not a Waiver Under the Federal Rules

In its May 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands, LLC, 137 S.Ct. 1514 (2017), the Supreme Court shocked the patent world by restricting the range of permissible venues in patent infringement cases for  domestic corporations.  (See our prior posts, here and here).  The Federal Circuit has now found – in its seemingly obvious and “common sense” conclusion in In re Micron Technology, Inc., Case 2017-138 (Fed. Cir. November 15, 2017) – that TC Heartland “changed the controlling law.”  The Federal Circuit’s decision resolves a pronounced split among district courts and, importantly, means that a defendant who failed to assert improper venue when filing a motion to dismiss before May 2017 did not necessarily waive the defense under the federal rules and therefore may seek transfer to an alternative jurisdiction where venue is proper under TC Heartland.

Before the Federal Circuit’s decision, district courts were split as to whether TC Heartland actually represented an intervening change in the law on venue because the Supreme Court suggested in TC Heartland that it was merely reaffirming its 60-year old holding in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).  In both Fourco Glass and TC Heartland, the Supreme Court held that, for purposes of patent venue, a US company resides only in its state of incorporation.  But in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), the Federal Circuit broadened this interpretation in view of certain statutory amendments, finding that a US company resides in any judicial district having personal jurisdiction over the company.  Hence the question:  Did TC Heartland change the law or not?

Courts holding that TC Heartland did not change the law on venue include those in Delaware, California (Northern and Central District), Illinois (Northern District), Massachusetts, Mississippi (Southern District), Oregon, Texas (Eastern, Northern and Southern District), and Virginia (Eastern District).  Courts holding that TC Heartland did change the law on venue include those in Arizona, Georgia (Northern District), Minnesota, Nevada, North Carolina (Western District), Tennessee (Eastern District),  Virginia (Western District), and Washington (Western District).

In Micron, the Federal Circuit finds that TC Heartland “clearly (if not quite expressly)” overruled VE Holding, and reminds the district courts that:

[c]ircuit-court precedent is binding on district courts notwithstanding the mere possibility that the Supreme Court might come to disapprove that precedent.

The Court then provides an analysis of the rules regarding waiver of a venue defense as set forth in the Federal Rules of Civil Procedure 12(h)(1)(A) and 12(g)(2).  Under these rules, the issue is whether the venue defense provided by TC Heartland was “available” to the defendant when it made an initial motion to dismiss.  The Federal Circuit concludes as a matter of law that the venue defense was not available before the TC Heartland decision, because VE Holding was controlling precedent under which such arguments would have been improper.  The mere failure of a defendant to raise the defense prior to TC Heartland therefore does not constitute a waiver under the federal rules.

In the case at hand, Micron moved to dismiss or transfer on the grounds that venue was improper under TC Heartland.  The District Court of Massachusetts denied Micron’s motion, finding that it had waived the defense when – prior to the TC Heartland decision – Micron filed an initial motion to dismiss on other grounds.  The district court, however, did not address the venue arguments on their merits.  The Federal Circuit therefore vacated the order and remanded so that the district court could consider the merits as well as any other potential bases to deny transfer – for example, because of delay in bringing the motion or acquiescence to venue.

The Federal Circuit’s decision should facilitate the transfer of pending cases – previously stuck in limbo after TC Heartland – that are improperly located under the new venue rules.  However, that number is decreasing as those cases are resolved.  In addition, the Federal Circuit emphasizes that district courts may exercise discretion in deciding motions to dismiss for improper venue, pointing to the stated purpose of the Federal Rules of Civil Procedure “to secure the just, speedy, and inexpensive determination of every action and proceeding” and to the inherent powers of the courts to manage their own affairs.

Accordingly, this decision may stand primarily as a reminder that Federal Circuit authority is binding – unless and until the Supreme Court overturns it.

Contracting parties should take notice of the latest interpretation ruling

Blank Envelope in HandIn the case of Zayo Group International Limited v Ainger and others, the High Court has adopted a literal interpretation of notice provisions in a commercial agreement. As a result, the court held that the claimant had failed to give proper notice of its warranty claim, and that its claim should be dismissed.

The case concerned a share purchase agreement (SPA) by which Zayo purchased the entire issued share capital of E Limited (the ‘Company’) from the seven defendant managers of the Company (the ‘Management Vendors’). Zayo alleged that the defendants had breached the Management Warranties in the SPA and sought to make a claim against them.

Paragraph 3.2 of Schedule 6 of the SPA provided:

No Management Vendor shall have any liability for a Management Warranty Claim except in circumstances where [Zayo] gives notice to the Management Vendors before [5pm on 13 November 2015].” 

Clause 12 of the SPA allowed delivery of notice by hand (including by courier) to each defendant at their individual address as set out in the SPA “… or such other address as may be notified in writing … by the relevant [defendant] to [Zayo].” Deemed receipt would occur on delivery. On the very last day for service (13 November 2015), Zayo engaged couriers to serve notice of its warranty claim on each of the defendants at their respective addresses set out in the agreement. Six of the couriers successfully delivered the notice. However, when the courier engaged to serve the fifth defendant (‘SJ’) arrived at her address, he was told that she no longer lived there. The courier left the address without leaving the notice. The 5pm deadline then passed. The court was asked to assess if notice had been validly served on SJ. Zayo argued that SJ’s failure to notify a change of address meant that the courier’s attempt to serve the notice should be deemed sufficient.

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USITC Denies Request For Entry Into Early Disposition Pilot Program

Under a pilot program initiated in 2013, the U.S. International Trade Commission (ITC) may designate an investigation for early disposition if the ITC believes that there is a potentially case-dispositive issue warranting the program’s speedy (100-day) treatment.  Since the program’s inception, however, the ITC has designated only a handful of cases for early disposition.  Although Certain Shaving Cartridges, Components Thereof and Products Containing Same, Inv. No. 337-TA-1079, Order (Oct. 25, 2017) was not lucky enough to be one of those cases, the ITC’s denial of the respondents’ request for entry into the early disposition program includes a few wrinkles worth noting. Continue Reading

‘Minute Winner’ loses out in TV format copyright claim

Can copyright subsist in the format of a television show?

Until recently, the only judicial decision on this question was back in 1989 in a case concerning the well-known talent show ‘Opportunity Knocks’. In that case, Hughie Green, the show’s author, producer and compere, argued that certain distinctive features repeated in every show, including the use of catchphrases (“this is your show folks, and I do mean you”), and a ‘clapometer’ to measure audience reaction to the competitors’ performances, were protected by copyright as literary and dramatic works. The Privy Council disagreed. There could be no literary copyright as the scripts “… did not themselves do more than express the general idea or concept of a talent quest” (although it was noteworthy that the scripts were never actually produced in evidence). The Privy Council also held that a dramatic work must have “sufficient unity” to be capable of performance but “… the features claimed as constituting the format of a television show, being unrelated to each other except as accessories to be used in the presentation of some other dramatic or musical performance, lack that essential characteristic.”

Following this ruling, it was widely believed that TV formats could not be protected by copyright. However, for the first time since the Opportunity Knocks case, the High Court has considered this question again.

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USITC Maintains General Exclusion Order Against Foam Footwear Despite PTO’s Finding of Unpatentability On Reexamination

For the second time in the past few months, the U.S. International Trade Commission (ITC) has decided to maintain an exclusion order despite final unpatentability findings by the U.S. Patent and Trademark Office (PTO).

The investigation is Certain Foam Footwear, Inv. No. 337-TA-567, which resulted in a general exclusion order in July 2011 based on infringement of U.S. Patent No. D517,789.  On August 9, 2017, the PTO found the sole claim of the patent unpatentable after an inter partes reexamination proceeding, and the challenging parties then requested that the ITC rescind its exclusion order.  The ITC refused, however, concluding that the circumstances were no different than other recent cases in which the ITC “determined that it would not disturb any issued remedial order, i.e., modify, suspend, or rescind the order, based solely on a final rejection from the PTO.”  Commission Order (October 20, 2017) at 2.

The ITC’s decision in Foam Footwear is yet another noteworthy example in what we previously identified (here) as a “string of recent cases concerning the ITC’s power to enforce and/or stay its remedial orders in light of intervening decisions by other tribunals.”

Our Security and Privacy // Bytes Blog Goes Live

We are delighted to announce the launch of the new Squire Patton Boggs Security and Privacy // Bytes Blog. The Blog will feature regular posts from our Data Privacy and Cybersecurity team, highlighting key data privacy and cybersecurity developments across the globe, with analysis of the practical implications. Many posts will be dedicated to helping organisations prepare for the coming of the GDPR in May 2018.   You can link to the blog at any time, or subscribe to get email alerts straight to your inbox as posts are added, keeping you right up-to-date with legal and commercial developments in this fast moving area. The subscribe option can be found towards the top right of the webpage.

For more information on the blog, or data privacy issues generally, please feel free to contact Ann LaFrance or Robin Campbell.

 

Scope of protection of existing trade marks unaffected by IP Translator, says CJEU

Cactus

The European Court of Justice (CJEU) has confirmed that its 2012 landmark ruling in IP Translator does not have retrospective effect.

The case concerned an application by Ms Isabel Del Rio Rodríguez to register “CACTUS OF PEACE” and “CACTUS DE LA PAZ” as EU trade marks. Cactus SA opposed the application based on its earlier EU trade mark registrations for the word mark “CACTUS” (registered in 2002) and a figurative mark also incorporating the word “CACTUS” (registered in 2001). The opposition would only succeed if Ms Rodríguez’s application covered goods or services identical or confusingly similar to those covered by Cactus SA’s existing registrations. Assessing that depended on the proper interpretation of the CJEU’s ruling in IP Translator.

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USITC Refuses to Rescind $650K Civil Penalty Despite Party and Staff Consent

The U.S. International Trade Commission (USITC) has determined to maintain the $650,000.00 penalty it imposed for violation of a consent order entered in a Section 337 investigation, notwithstanding that the parties and the Office of Unfair Import Investigations (OUII) supported rescinding the penalty. Continue Reading

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