Commercial disputes

Rise of the Machines: Robot Copyright
15 November, 2017


Rise of the Machines: Robot Artificial brainCopyright

The reality of Artificial Intelligence (AI) raises some interesting questions: Who owns copyright in AI (robot) generated content? Could that be the robot? If so, how would they hold it? How would they enforce it?

At its heart, copyright is a monopoly right granted to the author as a ‘reward’ for their creative work. However, where that work is created by an AI robot, does the robot need a reward such that its work is protected by copyright?

AI generated content is increasingly found in social media, advertising and even mainstream news and is attractive as a concept, introducing greater efficiencies to content production. In a creative context, AI has produced artistic works which can be indistinguishable from human generated content. In a commercial context, AI is set to challenge existing business, models as discussed in our recent post Artificial Intelligence and Lawyers.

The type of AI-generated content we’re talking about here is work that is normally protected by copyright, which has traditionally been for a human (or corporate entity), as owner, to commercialise and enforce. Enforcement against infringers, who copy and duplicate work without permission, can be through civil and criminal law remedies.

What’s the current position?

The first owner of copyright in a work (an article, photograph etc.) will be the author: the person who created it (normally a human).

Where the work in question is computer-generated, existing copyright law has provided that the person/company owning or directing the use of the IT systems concerned could be taken to be the owner of the work.

However, this may not provide for, or cover, how content could be created by AI in the future. AI is likely to become more prevalent and for a party relying on AI to generate content, it’s important to have the certainty of ownership so that copyright can be enforced with confidence.

The waters can be muddied by competing claims to ownership from various parties, including developers, designers, engineers and others involved in creating the AI systems. Also, as AI becomes more complex, trying to establish the owner of content is could be increasingly difficult. Could it therefore be easier in the future to simply name the AI robot as copyright owner? Could we abandon the concept of a human, or a human directed company, as owner behind it all?

The Future

As it could become more difficult to trace the genesis of content, more sophisticated systems may have to be devised to protect AI generated content. For now however, agreeing clear contract terms defining ownership with AI system owners may be our best option. Until the machines takeover of course….

Ownership of copyright is discussed in more detail in our guidance note.


Six years is no limitation for directors in breach of fiduciary duty
1 November, 2017

Limitation datesDirectors may not be able to rely on the standard six year limitation period if they are in breach of their duties to their company.

Under the Limitation Act 1980 (‘the Act’) most legal claims become “statute barred” after 6 years.  This means that they can no longer be pursued by court proceedings.  However, there are certain exceptions within the Act.

One of these is contained in s.21 of the Act and applies to claims relating to fraudulent breach of trust by a trustee.  It has been long established that directors of a company can be trustees for these purposes but there has been some doubt as to how far this extends.

The February 2017 Court of Appeal case of First Subsea Ltd v Balltec Ltd & others has now clarified that it essentially applies to any fraudulent breaches of fiduciary duty by a director.  What this means is that if a breach can be categorised as fraudulent then companies can potentially bring claims against directors long after the event.

In this respect, fraudulent does not have the same meaning as in the criminal context.  It means a deliberate act where there was an absence of honesty or good faith, and that can include where the director was reckless as to the consequences of his actions.

To summarise, companies and directors should not assume that potential claims for breach of fiduciary duty are statute barred after six years.  If the breach was dishonest, in bad faith or reckless then a longer period may well apply.

Making sure you get your voice heard in Court
18 October, 2017

If English is not your first language, it is important to consider how you will give evidence.  Failure to do so can have serious consequences to your case as highlighted in the recent case of Frenkel v Lyampert and others [2017] EWHC 2223 (Ch) (13 September 2017).

This case involved a claim for specific performance of an oral agreement that the parties entered into 15 years ago.  The agreement was not accurately recorded in written documentation and therefore witness evidence was key to how this case was determined by the court.  An issue arose at trial where one of the parties, a native Russian speaker, had made a witness statement in English, but was not able to be cross-examined (in English) before the court. 

The judge did not hold back with her criticism of this, commenting that the correct procedure had not been followed because “no one appeared to have thought about it”, which left the witness statements being “deeply unsatisfactory” and should be approached with “a considerable degree of caution”.

Guidance found in the Chancery Guide states that if a witness is not sufficiently fluent in English to give his or her evidence in English, the witness statement should be in the witness’s own language and a translation provided (para 19.13 of the Chancery Guide).  In this case the first defendant and their representatives failed to submit an application for the witness statements of the oral evidence to be relied on at trial to be filed in Russian.  Presumably this was because the witness understood and read in English if given sufficient time.  However, he gave evidence and was cross-examined through an interpreter as he was more comfortable speaking Russian.

Ultimately the judge accepted the evidence from this witness, but only if it was validated by other evidence given.  This procedural error clearly influenced her decision making process and this case could have easily had a completely different outcome.

If a witness is not comfortable being cross examined in English then they should submit evidence in their native language, along with a translation to avoid a judge making adverse inferences about the contents of their statement.  It is important therefore to consider this with your legal advisors at an early stage of the proceedings (and before your witness evidence is submitted). 

At Cripps we are a member of MARCALLIANCE which comprises legal firms from 13 different countries across Europe Asia and Africa and we deal with international matters frequently.    If you would like to get in touch or would like more information please contact Tom Bourne on 01892 506099 or

Pharmacy sales – dispensing with stock valuation disputes
17 October, 2017

Disputes about stock valuations following a pharmacy sale are relatively common, despite the fact that the valuation is usually said to be binding on the parties unless there has been a serious error or fraud. Having advised on pharmacy stock valuation disputes recently, I’ve prepared my top ten tips on arranging a valuation to avoid disputes which you can read here.

In my experience, the key to avoiding disputes is for the buyer to carefully review the stock in advance and to ask for an indication of the stock value for budgeting purposes so that the valuation doesn’t come as a nasty surprise. Buyers are often unaware that they have an opportunity before they purchase to ask for certain stock to be excluded from the sale altogether or to negotiate discounts for certain items. This would be advisable for excessive stock that might be unsaleable, left over seasonal stock, obsolete or slow moving items or wholesale stock which the buyer may not want at all. If these sort of discussions take place before the sale, there is less chance of a buyer seeking to challenge the valuation if they think it’s too high and doesn’t reflect the saleability of the stock.

All too often the seller takes charge with instructing the valuer as they’re keen to get paid for the stock leaving the buyer in the dark as to what instructions the valuer has received. It’s actually in the interest of the seller to involve the buyer at all stages because if the buyer later alleges that there has been a manifest error in the stock-take method, there is likely to be a delay in the seller getting paid until the dispute is resolved and this will usually involve a negotiation of the amount to be paid and both parties incurring legal costs. If both parties are fully involved in the selection and instruction of the valuer this helps ensure that the valuer has the right credentials, experience and impartiality and that they’re given the correct instructions. The parties should both try and attend the stock-take to see how it’s being done and to ask or answer any questions of the valuer – this way there’s less scope for either party to argue that the valuation method was flawed.

Will the European Court of Justice still have power over the UK post-Brexit?
22 September, 2017

For some, the power of the Court of Justice of the EU and British Flag and courtEuropean Union (CJEU) over Westminster has been a source of discontent for years. Escaping the jurisdiction of the CJEU was one of the main priorities for the “Leave” campaign.

The CJEU has two main roles: 1) to ensure that EU countries abide by EU law, and 2) to ensure that EU law is interpreted and applied in the same way in each EU country.

Example: The Snooper’s Charter

A recent example of the CJEU’s “incursions” into parliamentary sovereignty came about after David Davis (the current Brexit secretary) challenged the legality of GCHQ’s indiscriminate interception of call records and online messages. The CJEU ruled that GCHQ’s “general and indiscriminate” retention of emails and electronic communications was illegal under EU law. At a time when terrorist attacks in Paris, Brussels, and Nice were dominating the headlines, some saw this as a victory for the protection of privacy in a democratic society. Others – including the Government – lamented a missed opportunity for a practical and dynamic regime that would help keep people safe.

The CJEU’s ruling bound the UK, and has effectively curtailed the use of those powers under the Investigatory Powers Act 2016 (aka the “Snooper’s Charter”) that are incompatible with the CJEU’s ruling.

This was all despite the fact that, just over a month prior to the CJEU’s ruling, the House of Lords had approved the final version of the Investigatory Powers Bill.

Will the CJEU feature in any future UK-EU agreement?

One of the government’s recent Brexit negotiating position papers – entitled “Enforcement and dispute resolution:  a future partnership paper” – says: “In leaving the European Union, we will bring about an end to the direct jurisdiction of the Court of Justice of the European Union”.

Assuming that the UK and the EU can agree a future trade agreement, disputes are likely to arise in relation to 1) whether the UK and EU are abiding by the terms of the agreement, and 2) how the agreement is to be interpreted. Such disputes will have to be settled by some form of court (just as disputes over EU law are currently settled by the CJEU).

While it may seem obvious that this court should not be the CJEU, the EU might argue otherwise. Its position is that there are limitations, under EU law, on the extent to which the EU can be bound by a body other than the CJEU. If the EU has to be bound by a court other than the CJEU it will, like the UK at the moment, have to give up some of its legal sovereignty. The irony of such an argument would not be lost on the UK.

There will have to be a court that can settle questions arising out of any future trade agreement between the UK and EU. Whether or not that court will be the CJEU is simply another difficult, highly political point that the UK and EU will have to negotiate.



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