Month: October 2010

Strange laws for strange times

Has the Government been planting background statements and political justifications into primary legislation in the expectation of court challenges?

As “one of the recession’s worst casualties”, Ireland has had its share of disruption since 2007 and the financial turmoil since the collapse of the Celtic Tiger has led to a spate of crisis legislation.

There are two striking features of the more rushed pieces of legislation: (1) the inclusion of political commentary and (2) repeated use of the phrase “in the public interest” (which might remind some readers of Bull Island‘s Charlie McCreevy sketches).

For example, section 2(1) of the Credit Institutions (Financial Support) Act 2008 provides:

The Minister has, in the public interest, the functions provided for under this Act because, after consulting the Governor and the Regulatory Authority, the Minister is of the opinion that—

(a) there is a serious threat to the stability of credit institutions in the State generally, or would be such a threat if those functions were not performed,

(b) the performance of those functions is necessary, in the public interest, for maintaining the stability of the financial system in the State, and

(c) the performance of those functions is necessary to remedy a serious disturbance in the economy of the State.

Section 2(1) of the Anglo Irish Bank Corporation Act 2009 contains a strikingly similar provision which effectively copies section 2(1) of the 2008 Act and pastes in a few Anglo-specific details.

I haven’t been through the entire Statute Book, but had never before encountered primary legislation which explained its background in this way. One might expect this in the appropriately titled explanatory memorandum which accompanies each draft law (eg. this one). However, while an explanatory memorandum might be examined by a court when interpreting legislation, this is the exception rather than the norm.

The legislative editorialising seems to have developed somewhat by the time the National Asset Management Agency Act 2009 was drafted. Section 2 of that Act uses similar terminology which is, again, more political than legal in content but which is aimed at addressing the purpose of the legislation, rather than the context of it. The Financial Emergency Measures in the Public Interest Acts No. 1 & 2 2009 (scroll to bottom of linked pages) see the adoption of recitals, common in continental European civil law systems and familiar to Irish lawyers thanks to the regulations and directives of the European Union.

Lawyers in Ireland and the UK often wonder what the point to recitals is. The law should be confined, the thinking goes, to the four corners of primary legislative provisions and not muddied or complicated by mission statements, which may be advanced by a litigating party as, for example, giving rise to legitimate expectations. This article on the topic makes the point:

Recitals are supposed to be general statements. General statements are not something which ordinarily are recognized as giving rise to legitimate expectations. But also recitals in general (for instance, in contract law) are, well, recitals, not operative provisions and it is hard to fathom how they could give rise to positive obligations or defeat operative clauses.

Section 18(g) of the Interpretation Act 2005 is of relevance here. In general terms, it provides that marginal notes, headings and the like are to be ignored when interpreting legislation. However, the sections already referred to in recent crisis legislation are not headings and take the form of operative provisions (though they generally do not provide for any active measure).

It will be interesting to see on 1 November whether the divisional court which heard McKillen v. NAMA (a.k.a. Dellway Investment Ltd & ors v. NAMA, Ireland & the Attorney General) will consider section 2 of the NAMA Act when determining whether the circumstances outlined in that provision justify the operations of that agency [Update: it did make brief reference to section 2 at para. 4.2 & 9.55 of the judgment].

PS. The core pieces of emergency legislation are:

Koger v. HWM: significant Irish software case on competing with former employer

This week’s big intellectual property news might have been IRMA v. UPC, but last week saw another major judgment in Irish IP law: on Friday 8 October 2010, Mr. Justice Feeney gave judgment in Koger Inc. & Koger (Dublin) Limited v. O’Donnell, Woolman, Gross & HWM Financial Solutions Limited. The outcome has been described as “a victory for the right of IT employees in Ireland to regard their know how and experience as their own intellectual property.”

The case concerned former employees and contractors of the plaintiffs who set up in competition with them. This can be a fraught area, though of course there is nothing, of itself, wrong or unlawful about competing with a former employer or customer. The most common legal issues that arise in relation to such scenarios involve allegations that (1) the new competitor has breached contractual terms restricting them from such competition, and/or (2) the new competitor has breached the intellectual property rights of the former employer. Koger v. HWM involved such allegations, but it is also of wider relevance to the law on discovery.

All parties to the proceedings are involved in the  transfer agency software market and their customers are major financial services fund managers. The plaintiffs are linked companies marketing one of the leading products in that market. The three individual defendants formerly worked for the plaintiffs, either as employees or contractors, and subsequently set up the fourth defendant company to compete with the plaintiffs.

At the outset of the proceedings, the main case advanced by the plaintiffs was that the defendants developed their ManTra product to compete with the plaintiffs’ NTAS product as a result of a breach of confidence and an infringement of the plaintiffs’ copyright, particularly in their source code and design materials. This suggests a literal copying claim, ie: the defendants must have literally copied some or all of the plaintiffs’ source code and design materials. However, over the course of the proceedings it appears that the plaintiffs were forced to abandon this element of their claim, with their core expert giving evidence that he had never believed literal copying to have taken place.

This was a particularly interesting aspect of the case as, a few months before it went to trial, Mr. Justice Kelly gave judgment on a discovery motion brought by the plaintiffs. Kelly J’s judgment is of interest itself, as it deals with the extent to which a court can limit access to documentation discovered during court proceedings. For the purposes of seeking discovery, the plaintiffs’ experts “expressed the view that the defendants must have relied upon the plaintiffs proprietary source code and database structure information in order to develop the ManTra product” and they provided reports stating that they had discovered instances of literal copying. This allegedly copied code later transpired to have been licensed from third parties and was proprietary to neither side. Indeed, up to the time of the trial one of the plaintiffs’ experts contended that the defendants’ product contained source code from the plaintiffs’ product [Feeney J, para. 22]. However:

As the plaintiffs’ case was presented to the Court it became apparent that the plaintiffs no longer sought to rely on a claim based upon literal copying notwithstanding having claimed that such copying was substantial. [Feeney J, para. 24]

While the case started out, therefore, as being primarily concerned with literal copying of software source code it developed into a claim that the defendants had improperly benefited from their former association with the plaintiffs when setting up in competition. The allegations made by the plaintiff included that the defendants had conspired to set up in competition before they had terminated their involvement with the plaintiffs, that they had set about destroying the plaintiffs’ business and that they conspired to poach the plaintiffs’ staff.

Feeney J. noted that the credibility of witnesses was central to these matters. He found that the defendants’ witnesses were “truthful and reliable … coherent, accurate and credible.”

The evidence of [the defendants’] witnesses stands in sharp contrast with the evidence of [the plaintiffs’ two primary witnesses]. Both those witnesses demonstrated a willingness to provide misleading and unreliable evidence. They were evasive and unreliable in their evidence. Where there is a conflict [in evidence …] the Court favours the accounts given by and on behalf of the defendants. [Feeney J, para.18]

Feeney J also commented:

The manner in which the plaintiffs have prosecuted their claims demonstrates a willingness to alter and vary such claims without explanation. They have proceeded to drop a significant element of their claim, in abandoning the claim based upon E*TAS, without any explanation. Similarly, they have been prepared to persist with claims, such as the claim of literal copying in a material respect notwithstanding that their experts either did not believe that there was such literal copying or had not made the effort or been requested to ascertain and confirm that the common source code identified in the two products emanated from common third party sources. It was not until the very end of the plaintiffs’ case that there was an acknowledgement that the plaintiffs were not pursuing a claim for literal copying. A more troubling matter arose in evidence when it became apparent that the plaintiffs were prepared to plead and swear directly contradictory accounts in respect of the same set of facts in different jurisdictions. This was indicative of an approach whereby the plaintiffs were prepared to use a set of facts in such a manner as to manipulate them for present advantage without regard to the real truth. [Feeney J, para 28]

With regard to discovery, Feeney J characterised the litigation strategy of the plaintiffs as being “to make extensive and general assertions against the defendants and seek to have those parties disprove such matters.” This extended to seeking “further discovery when the discovery which has been obtained does not establish the claim already made”.

In effect, the overall approach to litigation demonstrated by Koger is that in relation to former employees the onus is on them to prove that they have done nothing wrong and that Koger can and will sue those parties to see whether or not discovery might produce the documentation necessary to prove Koger’s case and if the original discovery does not achieve that end, then further and additional discovery will be sought. [Feeney J, para. 31]

In light of the above, it is easy to predict the outcome of the case: all of the plaintiffs’ claims were dismissed. The judgment is long but worth skimming through, given the colourful nature of the proceedings (including Feeney J’s description of the plaintiffs’ manner of running their business and allegations that a death threat was made against one of the defendants’ witnesses when he was an employee of the first plaintiff).

The judgment helps define what is acceptable when a departing employees decide to compete with their former employers. For example, it confirms that embryonic discussions about a potential new business may be acceptable while still employed by another person.

A core argument advanced by the plaintiffs was that it was not credible for the defendants to develop their product so quickly without resort to improper methods. Feeney J found that the individual defendants succeeded in developing their ManTra product quickly as a result of their own significant skill and expertise. While some of that may have been gained while working for the plaintiffs, the defendants did not infringe the plaintiffs’ rights by employing such skill and expertise. An employer can protect their intellectual property rights, but that does not extend to the skill and expertise an employee or contractor might develop while working for that employer.

Strike One?

This week’s big intellectual property news was the judgment of Mr. Justice Charleton in EMI & ors v. UPC. The case was the latest plank in the record industry‘s campaign to force the introduction of a graduated response to online copyright infringement.

Charleton J’s judgment is long and there is a lot to get through.  I haven’t had the opportunity to read the judgement fully but a few highlights already stand out:

  • Evidence was adduced by the plaintiffs to justify claims that many thousands of tracks are illegally downloaded. Justin Mason looks at some of those claims and finds that, by the same logic, an album he invented on the spot has been downloaded 24,752 times. This evidence, which appears to be highly flawed, has already been represented as fact in the Seanad.
  • In 2009 Charleton J granted an order requiring eircom to block access to The Pirate Bay. As noted by TJ McIntyre at the time, the judgment was of limited value as it was not opposed by eircom and was delivered ex tempore. Simon McGarr points out that Charleton J now finds he was incorrect in granting that order. According to his latest judgment:

I regret that my previous judgement in the matter was wrong. The legislative basis enabling me to act in that way does not exist in Irish law as it exists in other European jurisdictions.

  • If eircom had contested that order, Charleton J may have been in a position to reach the decision now indicated in the UPC judgement. It’s an important point, as he also gave judgment clearing data protection concerns raised by the Data Protection Commissioner in relation to the graduated response settlement. That case was similarly unopposed and the Commissioner did not appear due to cost concerns.
  • Charleton J has repeatedly characterised online copyright infringement as theft and anyone engaged in downloading files in breach of copyright to be in the criminal sphere. Eoin O Dell draws attention to interesting posts on the question of whether or not copyright infringement is theft.

Attention “country bumpkins”: Labour wants your vote!

Labour has never really had a presence in this part of Limerick West (soon to be North Kerry-West Limerick). However, the combination of Eamon Gilmore’s popularity and the party’s success in the opinion polls has put all constituencies in play and the party recently had a large billboard on the main road through Newcastle West seeking members.

In that context, I was interested to read the views of Labour’s Cllr Gerry “Ginger” McLoughlin on my neck of the woods.

These country bumpkins have no regard for Limerick. They have destroyed the city with the planning, and are no friends of ours. We are not here to serve Newcastle West, or other places in the a******e of county Limerick. I am a city man – I don’t go down there, and have no time for them.


From the National Library of Ireland
Newcastle West around the 1900s. Or, for the Labour party, yesterday.


Joking aside, these are pretty unacceptable comments for an elected representative to make about the county surrounding his constituency.

In addition, the planning issues he mentions could only realistically be tackled by the measures proposed by the Brosnan proposals, which McLoughlin and his urbane colleagues are now opposing with such charming arguments as that quoted above.

Update: Labour are unrepentant and Jan O’Sullivan has backed Mr. McLoughlin’s “colourful” comments.

Why people care about The Record Industry v. The Customer

Cory Doctorow makes some good points on the use and abuse of copyright law, in response to some pretty churlish criticism recently directed his way. I particularly liked this:

… I don’t care if you want to attempt to stop people from copying your work over the internet, or if you plan on building a business around this idea. I mean, it sounds daft to me, but I’ve been surprised before.

But here’s what I do care about. I care if your plan involves using “digital rights management” technologies that prohibit people from opening up and improving their own property; if your plan requires that online services censor their user submissions; if your plan involves disconnecting whole families from the internet because they are accused of infringement; if your plan involves bulk surveillance of the internet to catch infringers, if your plan requires extraordinarily complex legislation to be shoved through parliament without democratic debate; if your plan prohibits me from keeping online videos of my personal life private because you won’t be able to catch infringers if you can’t spy on every video.

Via Adrian Weckler.

If you didn’t friend the Department of Social Protection, one of your “friends” snitched

The stories about the Department of Social Protection’s use of Facebook to detect fraud raised more questions than they answered.Someone talked! So, I requested details from the Department of its use of social networking.

Here’s the relevant part of the response:

Social networking sites, such as Facebook, are not a systematic part of the Department’s on-going targeted fraud and error control activities.

Circumstances, however, may give rise to a member of staff examining publicly available information on the internet, for example following receipt of a report from a member of the public making reference to relevant information on social networking sites.

Information from such sources is not used as evidence to terminate a claim in payment but may result in a review of entitlement by the Department.

On a point of information, at the end of August 2010 (latest figures available)

  • over 7,200 anonymous reports were made to the Department’s Central Control Division. (Reports are also made directly to scheme areas and public offices which are not included in that figure).
  • 500,000 reviews approx. were completed by the Department. Investigations which refer to social networking sites would be negligible in an overall context.

As only information which is publicly available on social networking sites is accessed in such investigations, the cooperation of the operators of such sites is not needed. The Department has not accessed, or sought to access, information on social networking sites which is not available to the public at large.

The above doesn’t necessarily get the Department around the requirements of the Data Protection Acts and it is not clear what the Department does with data submitted to it by members of the public which is not publicly available online.