Topical legal current affairs - April 2024

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April 2024 legal current affairs

This newsletter covers topical legal current affairs from April 2024, including the potential legal repercussions of the Baltimore port closure, the music industry's response to AI-related threats, the legal position on alcohol-free beer, and Elon Musk's pay deal.?

Please note that these articles do not constitute legal advice and should not be relied upon. They simply reflect the author's research and opinion.

BALTIMORE BRIDGE – the repercussions continue and business analytics group Dun & Bradstreet reckons that the impact of the port closure is costing about $1.7bn per week in the trade of consumer goods, automobiles, coal and other shipments. IF YOU ARE A MANUFACTURER WHO IS AFFECTED BY THIS, WHAT ARE YOUR RIGHTS RE COMPENSATION ETC.?

I’m not particularly familiar with this area of law, so will instead focus on broader principles that might be relevant.?

Firstly, commercial contracts often include what are known as “force majeure” clauses. These clauses predetermine the allocation of risk and free each party from liability if specified circumstances arise that are beyond the control of the parties and prevent either party from fulfilling their obligations.?Examples typically include strikes, riots, wars, pandemics, and what is referred to as “acts of God” (which refers to events such as hurricanes, floods or volcanic eruptions).

There’s a chance that clauses in the contracts between affected stakeholders such as manufacturers, the port authority, distributors, and consumers might include similar clauses that cover liability arising from port closures due to damage.?However, I think insurance will probably be the biggest factor here. Contracts often stipulate who is responsible for insuring goods at certain stages in the distribution process.?For example:

• A manufacturer might be responsible for goods until the point at which they are loaded onto the ship;
• The shipping company might then take responsibility until the goods are delivered to a warehouse at the next destination; and
• The retailer or end recipient might then take responsibility from the point of delivery.

If this is the case, the contracts between the parties might stipulate that each party is responsible for arranging insurance to cover their period of responsibility.?If the owner of the ship that crashed into the bridge is found liable, I imagine this could be incredibly expensive for their insurers, although the extent of the liability will depend on the legal principles that apply and the contracts involved.

Not that I think it’s relevant here, but for the sake of comparison, in the context of negligence claims in the UK, damage needs to have been reasonably foreseeable for a claim to be successful.

To access our links to sources / further reading recommendations, check out the blog post version of this article.

The music industry is pushing back against AI via the International Confederation of Music Publishers (ICMP), a music industry body that covers about 90% of the world’s commercially released music. The body has launched a website that will enable labels to protect their copyright. CAN YOU GIVE US MORE DETAILS ON HOW COMPANIES CAN NOW PROTECT THEIR COPYRIGHT AS FAR AS AI IS CONCERNED?

To give some legal background, songs and compositions are automatically protected by copyright as soon as those works are recorded in some form.?Songwriters and composers will therefore hold the copyright in their songs, unless they have sold or transferred that copyright elsewhere.

Copyright holders may licence their copyright to third parties, but in the case of the disputes around AI and large language models, it’s fairly clear that many organisations have not procured licences to use music to train their models.

Accordingly, the ICMP has launched www.rightsandai.com, which includes a declaration on behalf of its composer and songwriter partners across the world.?This declaration formally states that scraping or accessing music online – for example to train AI models – is prohibited.?I’m guessing this is intended to act a little like a set of terms and conditions for the benefit of those composer and songwriter partners.

However, whether this will be effective in deterring organisations from accessing the compositions – or whether it will help in the context of a dispute where copyright had been breached - is a whole other question.?To succeed in a copyright claim, the copyright holders must prove financial loss as a result of the alleged infringement, and this can be tricky.?For example, can songwriters prove that they will have generated less revenue from their songs as a result of those songs being used to train models? It’s all a little unclear.

As a final point, remember that intellectual property law differs across jurisdictions, and it’s likely that laws will evolve over time in response to the changes brought about by AI.

To access our links to sources / further reading recommendations, check out the blog post version of this article.

Asahi is moving towards providing a higher proportion of zero and low-alcohol drinks as part of its beverage line-up. The company joins rival brewers including Heineken, Budweiser and Guinness who are all looking to hop onto the low-or-no alcohol trend that is prevalent particularly among increasingly health-conscious younger customers.?WHAT'S THE LAW ON ZERO-ALCOHOL DRINKS FOR KIDS? IS DRINKING LOW/ZERO-ALCOHOL DRINKS GOING TO BE THE NEW VAPING?

?I’ve actually become a big fan of alcohol-free beer. Anyway, it’s worth kicking off by noting that “alcohol-free” beer tends to still include some level of alcohol. Steady Drinker, a low and no alcohol blog, states that this ranges from “trace amounts” of alcohol to “around 0.5% alcohol by volume” (or “ABV”).

However, in most jurisdictions, drinks containing less than 0.5% ABV aren’t legally classed as alcoholic, and are therefore not subject to the restrictions that apply to alcoholic drinks. This is specifically covered in the UK Licensing Act 2003.?Despite this, many retailers and pubs still restrict the sale of alcohol-free beer to children. But why?

Well, firstly, it seems that some believe it’s the “right” thing to do in order to deter children progressing onto alcoholic drinks further down the line.?Given the similarity between the look and taste of alcoholic and non-alcoholic drinks, promoting the non-alcoholic versions can arguably indirectly promote the alcoholic equivalents to children.?

To give a slightly cynical view here, by “right thing to do”, I believe most businesses probably mean “best way to preserve our reputation”.?On that note, some sellers also don’t want to give the impression to customers that other underage customers are being permitted to purchase alcoholic products, an impression that may well arise if children are seen buying or drinking beverages that visually resemble alcoholic drinks.?This perhaps explains why large alcohol brands (including AB-Inbev) and retailers (including Waitrose) have in place voluntary codes and policies that prohibit the sale of these products to children.

Moreover, a blanket ban on selling non-alcoholic beer to children can make it easier for pubs to ensure that they are complying with the rules on alcohol, as – according to Wetherspoons - it can be difficult for staff to distinguish between customers who are drinking alcohol and those who are not.

I’m not sure the comparison between vaping and non-alcoholic beer is necessarily analogous, as it is illegal to sell e-cigarettes (including vaping liquids) that contain nicotine to any person below the age of 18. Vapes that don’t contain nicotine might offer an analogy however.

To access our links to sources / further reading recommendations, check out the blog post version of this article.

Tesla had an interesting week this week! It asked shareholders to back the $56bn pay deal for Elon Musk that a Delaware judge recently rejected just as he announced that he would cut 10% of the workforce and the company announced more delays for Cybertruck deliveries without elaborating on why. HOW IS IT POSSIBLE THAT MUSK'S DEAL COULD BE REJECTED? WHAT IS THE LAW ON THIS? SURELY IF IT'S ALL BEEN AGREED AND EVERYONE'S OK WITH IT THAT SHOULD BE THE END OF THE MATTER.

According to the Guardian, the case to challenge the pay package originally agreed in 2018 was brought by a Tesla shareholder, who accused Musk of improperly dictating negotiations around the compensation package, and claimed that the board acted without independence.

A Delaware judge essentially agreed, basing her decision, in part, on the fact that Musk had “thick ties” with the directors when negotiating his 2018 package and had “dominated the process that led to board approval of his compensation plan”.

So it seems like – under Delaware law at least – certain decisions can be challenged if there was alleged undue influence at the time from one or more of the parties involved.

Note that in the UK, there are legal principles such as undue influence and duress, which can result in certain actions being undone in situations where one party has wrongly coerced or exerted some kind of dominance over the other.?I’m not aware of examples where these principles have been relied upon to undo an agreed remuneration package however.

Anyway, according to Reuters, Tesla is now seeking a re-vote based on a Delaware law that allows companies to ratify actions that are technically defective.

To access our links to sources / further reading recommendations, check out the blog post version of this article.

Peter Watson helped to deliver Commercial Law Academy's Discussing current affairs and industry trends course, which offers in-depth advice on how to research into and confidently discuss current affairs, including how to select which news stories to focus on, what to consider when reading the news, and how to structure your discussions in interviews.

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