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  Uber Eats humble pie as restaurants are delivered from unfair contract terms

  Restaurants under immense pressure due to COVID-19 impacts received slight reprieve with Uber Eats being forced to remove unfair contract terms.

  Uber Eats can no longer have their cake and eat it too. The ACCC has forced the multinational company to remove “unfair contract terms” from their contracts with small restauranteurs.  It is no wonder that Uber’s contracts left a sour taste in the restauranteurs’ mouths when it included the following clauses:

  1. Restaurateurs party to the contract had to agree that Uber did not provide any delivery or logistics services. This lemon of a clause presents a pickle for contracting parties, not only does it present a legal fiction, but it is at odds with Uber’s website which is emblazoned with the words “we deliver”.
  2. The contract stated that the drivers were “agents” of the restaurant despite their workflow and pay being controlled by Uber, not the restaurant.
  3. In the event that the food became substandard, for instance if hot food became cold, Uber could demand that the restauranteur cover the customer refund.
  4. Uber Eats could unilaterally vary the contract at any time.

  Here the proof was in the pudding, as the ACCC considered that these terms were manifestly unfair and placed a disproportionate amount of risk on local restaurants.

  But what does it take for a term to be unfair?

  Section 23 of the Australian Consumer Law (“ACL”) prohibits unfair contract terms. For a contract term to be unfair it must:

  • Cause significant imbalance in the parties’ rights and obligations;
  • Not be reasonably necessary to protect the legitimate interests of the party advantaged by the term; and
  • Cause detriment to a small business (a business with 20 employees or less) if it were applied or relied upon.

  Uber’s terms outlined above from 1 – 4 contain all ingredients of unfair contract terms. For instance, consider terms two and three; here Uber essentially placed all risk associated with the standard of delivery on the restaurant. Despite the fact that these businesses have no control over delivery time, payment of delivery drivers or their workload. This is a classic example of how a ‘take it or leave it’ contract has caused a significant imbalance in the relationship between Uber and the restaurant. Uber would bear little to no risk under the contract, and restauranteurs would be liable under the agreement for issues of service outside of their control.

  Further, in instances where Uber has contracted with restaurants who employ less than 20 employees, if Uber choses to rely upon terms three and four, this could place small operators at considerable disadvantage. For example, some small restaurants reported that if Uber demanded that the restaurant refund a disgruntled customer, the restaurant had essentially provided their product for free to Uber.

  What are the consequences for an unfair contract term?

  In short, none. Including unfair contract terms in an agreement does not attract any penalty under law. Indeed, s 23 of the ACL merely enables the ACCC to challenge the offending term in court and have it declared “void”. In a nutshell, this means that the ACCC cannot obtain civil pecuniary penalties when a term of a contract is found to be unfair.

  The lack of penalties in this area of law means that small businesses are at a great disadvantage when it comes to negotiating standard form contracts, as there is very little incentive for large corporations to comply with s 23. This was certainly the case here, as Uber Eats only agreed to change the terms of the contract so that restaurants would only be responsible for matters “within their control” after the ACCC intervened.

  Even though restaurants have received a momentary reprieve from Uber’s unfair contract terms, any losses that they have incurred as a result of the unfair terms will not be reimbursed. Although the Silicon Valley giant can no longer contractually grind small restaurants to make their bread, the lack of penalties for unfair contract terms puts smaller businesses on the chopping block whilst big businesses board the gravy train free of risk and liability.

  Written by Riley Berry with the assistance of Claudia Weatherall.

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• 

  How to protect your intellectual property in unprecedented times

  COVID-19 has propelled businesses into unprecedented times.  Many businesses will be able to adapt to new lockdown measures by moving to partially or fully operate online. Businesses moving online must understand and act fast to protect intellectual property.  In the case of Hardingham v RP Data Pty Limited,[1] a photographer assumed an “implied licence”, mistakenly relying on the assumption that an implied licence restricted the use of his intellectual property.

  Two missing intellectual property ingredients

  James Hardingham, a professional photographer, who was the sole director and shareholder of Real Estate Marketing Australia Pty Ltd (‘REMA’), took photos and made floor plans for a number of real estate agencies. Those agencies then uploaded the content to realestate.com.au (‘REA’) who then shared it with corelogic.com.au (‘RP data’) (‘the websites’). The legal battle that ensued comprised of two parts:

  1. no formal ownership agreement existed between the real estate agencies, the websites and REMA in relation to the copyright of the photos and floor plans provided by Mr Hardingham; and
  2. no clear understanding that when agencies uploaded the photos and floor plans to online property listing platforms on the websites, the photos would still be used by REA and RP data even after the sale or lease of a property had been completed. [2]

  Whilst Mr Hardingham recognised that there was an implied licence for the agencies to use his photographs and floor plans for the marketing of sale and lease of the properties on REA, he argued that the implied licence did not extend to RP data nor that any such implied licence would allow his intellectual property to be used long after the sale or lease (for which the images were originally made) had been completed.[3]

  Court finds implied licence exists

  The Court found that Mr Hardingham had known that real estate agencies had been uploading his intellectual property to REA since 2014. He should have known that the REA privacy policy was freely available to him. Since 2014, Mr Hardingham had set the fees of his services with the knowledge that the images would almost certainly be uploaded to both websites.[4] These factors pointed to the existence of an implied licence for the websites to not only use the images for the purpose of the sale or lease, but that the websites could retain the photos and floor plans uploaded by real estate agents. Furthermore, the Court found that as such listing platforms were used by the overwhelming majority of Australian real estate agencies, and so Mr Hardingham would have known that agencies were going to upload his content to these platforms.[5] The Court concluded that the agencies who had commissioned REMA’s work did not “own” the copyright over the uploaded images. Rather, proving such “ownership” was unnecessary for reason that an implied licence allowed the website owners the right to retain and use those images.[6]

  Lessons

  There are two main lessons that can be drawn from the case of Hardingham:

  1. clear and written Intellectual Property Licence Terms are always preferable over assuming that another party will use or not use your intellectual property in a certain way; and
  2. knowingly “acquiescing” to use of your intellectual property can demonstrate an implied licence for third parties to take and use your intellectual property. Conversely, if a copyright owner had no actual or constructive knowledge of its intended use by third parties, they may be able to demonstrate that the initial permission to use the images was more limited.

  Put another way, if you don’t take reasonable steps to control your copyright, allowing it to be taken and used in a system with established rules of use, then you might lose your right to that control, at least within that system.

  Contact BAL Lawyers dedicated team of Business Lawyers for advice on protecting your Intellectual Property rights online.  Our lawyers will work with you to establish clear guidelines and expectations around the use of your IP, or possible infringements, in the context of Australian Copyright Law.

  Written by Riley Berry with the assistance of Claudia Weatherall.

  [1]  [2019] FCA 2075.

  [2]  Ibid 24.

  [3]  Ibid.

  [4]  Ibid 60 – 64.

  [5]  Ibid 60.

  [6]  Ibid 85.

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• Message regarding COVID-19

  The following is a message from our Managing Legal Director, John Wilson:

  

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• 

  FREE WEBINAR

  CORONAVIRUS:
  EMPLOYMENT LAW ANSWERS FOR HR MANAGERS
  

  WATCH

  

  As confirmed Coronavirus cases increase worldwide and in Australia, HR managers must consider strategies to adapt to, and deal with, the situation.  Gabrielle Sullivan, Director of BAL Lawyers Employment Law and Investigations Group and NSW accredited specialist in Employment and Industrial Relations Law, presents a free online webinar for HR Managers.

  This Webinar is provided under the banner of HR Breakfast Club.  HR Breakfast Club connects like-minded professionals in Canberra to share updates and insights on how to make businesses better places to work.  The format normally consists of a monthly live forum, bringing together HR people to benefit from the experience of their peers, our lawyers, and guest presenters, in a relaxed and open setting.

  For future clubs, participants can join our webinar using a unique link sent to them post-registration. Questions can be submitted during the session using an online messaging facility. If you wish to provide questions for  consideration in advance, please do so via your registration or by emailing events@ballawyers.com.au.

  Please keep in touch with your needs and the kinds of topics and information needed during these unprecedented times.

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• 

  Hey Google - I give a damn 'bout my online review

  Anyone can post a negative online review and in the blink of an eye, bring down a business’ reputation.

  Negative online reviews have the power to permanently ruin the online presence of businesses on popular platforms such as Google. In this digital age, it is a situation not unfamiliar to business owners around the globe.

  But how can companies defend their reputation from defamatory and damaging reviews when Google requires no verification from its users? Australian business owners have struggled for years to convince Google to take down negative and allegedly false reviews when unable to identify and contact anonymous authors. The recent decision of Australian Federal Court Judge, Murphy J, has tipped the scales back in favour of independent business owners.

  Following the Federal Court’s decision on 12 February 2020, Google will be compelled to provide information to Melbourne dentist, Dr Matthew Kabbabe, to help him track down anonymous author “CBsm 23” who posted an allegedly defamatory review in relation to Kabbabe’s dental practice.

  According to Murphy J, the review stated that Dr Kabbabe was “extremely awkward and uncomfortable”, that the procedure was not “done properly” and it seemed that the he “had never done the this before”, such that other patients should be warned and “STAY AWAY”.[1] In November 2019, Dr Kabbabe had asked Google to remove the review and in February 2020 asked Google to identify CBsm 23. Google refused both requests, stating that “we do not have any means to investigate where and when the ID was created.”[2]

  Despite this, Murphy J has considered that Google is likely to have or have had control of the documents or data to help Dr Kabbabe identify CBsm 23 and will be ordered to provide information including IP addresses, subscriber information, and any phone numbers associated with that account. [3]

  With anonymity as a shield against any repercussions, it is a very real possibility that online reviews provide false and misleading information about companies. As identified by Dr Kabbabe’s lawyer, the CBsm 23’s review was “malicious” and there exists a possibility that it came from a competitor or disgruntled former employee.

  The Federal Court’s decision comes after the Supreme Court of South Australia’s ruling in Cheng v Lok [2020] SASC 14 where a Barrister, Gordon Cheng, was awarded $750,000 in damages over an online review containing false information from a woman who never hired him.

  This case stands as the latest of many defamation claims raised against large digital platforms, including Google and Facebook, who refuse to take down anonymous and allegedly false reviews about businesses.

  It seems the tables are turning, and Google has some answering to do.

  Written  by Laura Scotton with the assistance of Felicity Thurgate.

  [1] Kabbabe v Google LLC [2020] FCA 126, at [15].

  [2] Kabbabe v Google LLC [2020] FCA 126, at [17].

  [3] Kabbabe v Google LLC [2020] FCA 126, at [18].

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• 

  What the ACCC’s Digital Platforms Inquiry Means for Your Business

  It is no secret that in today’s society there are a few companies that reign supreme when it comes to how we view digital content. Regulatorily speaking – erhem – keeping up with the evolution of technology is a never-ending game of fat cat and mouse. Australian Competition and Consumer Commission’s (“the ACCC”) recent inquiry into Digital Platforms (“the Inquiry”) has given us insight into how these large corporations collect, use and share our data – often without us even realising that it is happening. But the impact of the Inquiry is not limited to just those few large foreign companies, such as Facebook and Google, the findings and the resulting policy and law-making changes will no doubt have far reaching consequences that will affect small and large business alike.[1]

  Generally, the outcome of the Inquiry is that, in the field of “data collection,” there needs to be in place measures that will better protect smaller players in the market, namely by:

  • improving transparency of how data is collected, used and shared;
  • addressing the power imbalances – whether between consumer and company, or between different companies; and
  • finding ways to ensure that where large corporations do have substantial market power it is not used to lessen competition in the media and advertising services markets. [2]

  The Government Response to the Inquiry

  On 12 December 2019 the Government released ‘Regulating in the Digital Age’ – their response to how they plan to tackle issues unearthed by the Inquiry. The Government’s immediate response to the report includes investing $26.9 million in a new branch of the ACCC to monitor and report on competition and consumer protection in digital platform; its first order of business: to investigate the supply chain of online advertising and ad technology. [3]

  The opaque nature of the ad-tech supply chain means that businesses who use these services are never sure if they are getting bang for their buck, as the sum of prices charged by ad tech suppliers and the share of advertising expenditure they retain are unknown to consumers.[4] This lack of clarity is exacerbated by Google and Facebook obscuring how they rank and display their advertising. The Government’s decision to immediately allocate funds and investigate the online advertisement supply chain bodes well for smaller Australian businesses who rely on online advertisements, as they may be better placed to make more informed decisions on how to strategically enhance their online marketing strategy.

  Notably, the Government’s response to the Inquiry has remained silent on its first recommendation regarding mergers and acquisitions of digital platforms.[5] Despite the Government’s silence, the ACCC will take a tougher stance on any merger in the digital platform space that threatens potential competition.[6] This may place a spanner in the works for both tech behemoths and small digital start-ups whose aim is to be bought out by big tech companies. This could have adverse effects on small scale digital innovation, as it may make it harder to appeal to potential investors. Ultimately, this heightened regulatory scrutiny may benefit consumers through enhancing competition, as big companies may be prevented from gaining an even larger market share.

  What this Means for Your Business

  Although it is premature at this stage to gauge the full impact of the Inquiry on Australian business, it marks the dawning of a new era of regulation in the Wild West of digital platforms. Digital monoliths may face closer scrutiny when buying out their rivals and when developing their advertising services, while smaller businesses and advertisers who use these platforms stand to benefit from greater transparency around the digital advertisement supply chain. However, all digital platforms, regardless of size, will have increased obligations to protect consumers’ privacy and data if the recommendations of the Inquiry are implemented.

  Written by Anna Phillips with the assistance of Claudia Weatherall.

  [1] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 1 – 3.

  [2] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 3.

  [3] Department of Prime Minister and Cabinet, ‘Response to Digital Platforms Inquiry,’ (Media Release, 12 December 2019) < https://www.pm.gov.au/media/response-digital-platforms-inquiry>.

  [4] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 12.

  [5] Department of Prime Minister and Cabinet, ‘Response to Digital Platforms Inquiry,’ (Media Release, 12 December 2019) < https://www.pm.gov.au/media/response-digital-platforms-inquiry>.

  [6] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, June 2019) 10.

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