News: 1641294364

  ARM Give a man a fire and he's warm for a day, but set fire to him and he's warm for the rest of his life (Terry Pratchett, Jingo)

Offering Patreon subs in sterling or euros means you can be sued under GDPR, says Court of Appeal

(2022/01/04)


Companies anywhere in the world that offer Patreon subscriptions in pound sterling are subject to EU data protection laws, according to a startling Court of Appeal ruling in England and Wales.

The decision, part of an ongoing lawsuit between an Israeli-British man and a US news publisher that allegedly libelled him in a series of stories published in 2020, is likely to have far-reaching and potentially unintended consequences.

In the case, between dual citizen Walter Soriano and Forensic News LLC, Lord Justice Warby ruled that the EU's General Data Protection Regulation applied to Forensic because the company's Patreon page allowed signups in sterling and euros. The judge said this showed Forensic was "established" inside a country subject to GDPR.

[1]

"The offer and acceptance of subscriptions in these local currencies is arguably a 'real and effective' activity that is 'oriented' towards the UK and EU," said the [2]appeal judgment [PDF].

[3]

[4]

Forensic had just three Patreon subscriptions in sterling, whereas some 85 per cent of its $50,000 income over 18 months came through the signups site. At the time of writing, the company's Patreon page offered basic subs at £4 ($5.36) a month, or £46 ($61.73) a month for well-heeled people wanting to buy a branded hoodie and early access to upcoming stories.

Soriano had appealed against [5]a previous High Court ruling that prevented him from suing Forensic under data protection laws. Mr Justice Jay found in January 2021 that Soriano's lawyers were "far short" of proving Forensic could be sued under GDPR.

[6]

Overturning the lower court's decision, Lord Justice Warby observed: "The key issue under Article 3(1), as I see it, is whether the creation and use of the Patreon subscription facility demonstrates 'stable arrangements'."

"Stable arrangements" in EU data protection law means a business targets the region and processes EU citizens' personal data, as explained by London law firm Bird and Bird

[7]PDF

. The Court of Appeal held that Forensic offering Patreon subscriptions in sterling and euros was enough to cross the "low bar" for the EU law to apply.

English courts were ruling whether EU GDPR applied here because Forensic's stories were published before Brexit took effect on 31 December 2020.*

[8]Can we exhale yet? EU set to rule UK 'adequate' for data sharing in post-Brexit GDPR move

[9]Gov.UK taskforce publishes post-Brexit wish-list: 'TIGRR' pounces on GDPR, metric measures

[10]Booting up: Footballers kick off GDPR case for 'misuse' of their performance data

[11]UK watchdog's punishment for Blackbaud, Easyjet, other big privacy lawbreakers was slap on the wrist in private

Warby, who was judging the case along with Lady Justice Laing and Dame Victoria Sharp, president of the Queen's Bench division of the High Court (which hears all media and data protection lawsuits), seems to have realised he's opened a large can of worms.

"As these issues will, so it seems, need further and definitive consideration in this case it seems to me that the Information Commissioner should be invited to consider intervening to assist the court," he said in the judgment.

[12]

The Register has asked the Information Commissioner's Office if it will take up the Court of Appeal's invitation.

Soriano's case against Forensic will now proceed on libel and data protection grounds. ®

Bootnote

*All EU law in force on 31 December 2020 was copied into UK law and continues in effect today. GDPR itself survives as a frozen creature within the UK's Data Protection Act referred to as UK GDPR. Currently, the EU considers that the UK's data protection laws give it [13]data adequacy .

Get our [14]Tech Resources



[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YdR9ROG-Qg9eymAKz1CLVQAAABA&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[2] https://www.judiciary.uk/wp-content/uploads/2021/12/Soriano-v-Forensic-News-judgment.pdf

[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YdR9ROG-Qg9eymAKz1CLVQAAABA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YdR9ROG-Qg9eymAKz1CLVQAAABA&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[5] https://www.bailii.org/ew/cases/EWHC/QB/2021/56.html

[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YdR9ROG-Qg9eymAKz1CLVQAAABA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[7] https://www.twobirds.com/~/media/pdfs/gdpr-pdfs/11%E2%80%94guide-to-the-gdpr--material-and-territorial-scope.pdf?la=en

[8] https://www.theregister.com/2021/02/15/uk_gdpr_adequacy/

[9] https://www.theregister.com/2021/06/17/post_brexit_laws_mps_wishlist/

[10] https://www.theregister.com/2021/10/12/footballer_data_trade_case/

[11] https://www.theregister.com/2021/12/01/ico_reprimands_large_organisations/

[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YdR9ROG-Qg9eymAKz1CLVQAAABA&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[13] https://www.theregister.com/2021/11/01/data_transfers_europe/

[14] https://whitepapers.theregister.com/



Doctor Syntax

It sounds reasonable. Why should it be different to collecting money here by any other means?

On the other hand...

Mishak

Does that mean that if a business only accepts USD then GDPR cannot apply?

Re: On the other hand...

gerdesj

No. Here GBP and EUR are used as evidence of something, their lack does not imply the opposite.

Re: On the other hand...

eldakka

> Does that mean that if a business only accepts USD then GDPR cannot apply?

If it doesn't operate in UK/EU, then yes.

The judgement is that offering transactions in the local currencies (£/€) is tantamount to operating in the UK/EU. It is expanding the definition of what it means to be operating in the UK/EU for GDPR purposes.

Therefore either physically operating in the UK/EU (i.e. a local office) or effectively operating in UK/EU (trading in £/€) is sufficient to establish the link for GDPR purposes. It's not an "and", it's an "or", both don't have to be true. If the ruling stands that is.

Re: On the other hand...

katrinab

No, it merely removes one of the reasons why it could apply. There may be other reasons for it to apply.

Re: On the other hand...

Doctor Syntax

I'm not sure why you got the downvotes as it is actually a good question.

AFAICS that wasn't a situation the court was asked to decide on so it didn't decide on it. The choice of currency was taken as an indication of trading in the EU (including the UK at the time). Presumably this was what the complainant argued. If they only accepted dollars there may have been other indications for the complainant to argue and the court to accept or reject as it considered appropriate.

If they only accepted USD and specifically said "Not available in the EU" or maybe USD and other non-EU currencies the situation might have been different but you'd need to see how a court ruled in those circumstances to be sure.

Case law grows by interpreting the legislation in relation to specific sets of circumstances.

Re: On the other hand...the corollary

I Am Spartacus

Does this mean that a UK company accepting payment in USD becomes subject to US Law, and more importantly, US tax policy?

Re: On the other hand...the corollary

heyrick

A while back, a musical group (Dutch, IIRC) were awarded a successful copyright infringement ruling in the US, but they were not awarded any damages because their music was not registered for copyright in the US, despite this not being a requirement in their country (or any other country in the Berne Convention).

So in response to your question, I think " if and when it suits them " would be the most appropriate answer.

Re: On the other hand...the corollary

katrinab

Not necessarily. Certainly not US tax policy.

There are actually more US$ spent in the UK than in the USA, thanks to The City of London.

Also, if for example, you own an oil field in the North Sea (Scotland), and sell 1 million barrels of oil to a refinery in Grangemouth (also Scotland), your invoice will be for $76,240,000, not £56,530,000.

Re: On the other hand...the corollary

Anonymous Coward

Does crude oil being priced in US dollars mean that the transactions actually take place using US dollars?

Re: On the other hand...the corollary

David 132

No. Triganic Ningis. Which explains why the energy market is a little dysfunctional lately.

Re: On the other hand...the corollary

Chloe Cresswell

You'd think they'd have made enough to own a Pu...

Interesting decision

tiggity

Don't see how accepting certain currencies leads to that leap of logic.

All it seems to me is that its taking account of different payment preferences, used to work on software with and so (obviously to be more user friendly to potential customers) Euro and US dollar was offered as an alternative to UK sterling (with a bit of markup to cover currency fluctuation rates, costs of conversion to sterling, and Euro and dollar prices frequently updated (automated) to make sure no big hits from unpleasant exchange rate wobbles)

As it was digital download then no knowledge of customer location (use of dollar not necessarily US, ditto Euro use may not mean EU ... I used to have a EU bank account in Euros for a while as on a contract where I was paid in Euros and worked out better value than UK banks "interesting" exchange rates applied if banking Euros in a sterling account)

I fail to see how being nice to customers like that implies implicit use of EU data protection rules.*

* irrelevant as company was GDPR compliant (when I was there, no reason to assume its changed)

Re: Interesting decision

General Purpose

See para 97 of the ruling:

"On the evidence, the defendants did more than merely making their journalism accessible over the world wide web. They intended to make their output available in the UK and EU, and succeeded in attracting a more than minimal readership. In due course they expressly solicited subscriptions from within the UK and EU, via the Patreon platform. They succeeded in securing three subscriptions in sterling and three in Euros. This may be “minimal” activity but nothing more is required, according to the authorities."

Re: Interesting decision

katrinab

Most Patreons are priced in US$.

If you are in the UK, Patreon will probably convert it to £ for you, or if they don't, your bank will if you pay from a £ account. But this company was actually pricing the subscriptions in £.

Re: Interesting decision

Joe W

Plus the conversion rate is not stable in time when the offer is in USD, and then converted by a website script, bank or PayPal. Pinning the price in GBP or EUR to a fixed value implies quite a bit more involvement in the EU and the UK, and tayloring your offers to that market. Whether that's a reasonable assumption is for the Information Commissioner and the next court to decide. I can sort of follow the argument - though I am not sure if I really like the conclusion and the can of worms this implies.

Re: Interesting decision

General Purpose

It turns out they didn't just imply involvement. Para 85 of the ruling has

"the first defendant tweeted, and the second defendant re-tweeted “Everyone in the UK or EU can now pledge to Patreon in their local currency of Euros or Pounds. This will help prevent you paying extra conversion fees from your bank.”"

Re: Interesting decision

Mixedbag

And that is probably the key point of the finding.

I had to go and check my memory as I thought GDPR was actually broad enough to always apply if the data subject or the data controller was a subject of a signed up country but from the guidance there does also have to be a targeting of the individual that had entitlement to those rights. So an incidental customer/user is fine but if you market to a UK/EU citizen then GDPR absolutely applies.

https://ec.europa.eu/info/law/law-topic/data-protection/reform/rules-business-and-organisations/application-regulation/who-does-data-protection-law-apply_en.

The GDPR applies to:

a company or entity which processes personal data as part of the activities of one of its branches established in the EU, regardless of where the data is processed; or

a company established outside the EU and is offering goods/services (paid or for free) or is monitoring the behaviour of individuals in the EU.

If your company is a small and medium-sized enterprise ('SME') that processes personal data as described above you have to comply with the GDPR. However, if processing personal data isn’t a core part of your business and your activity doesn't create risks for individuals, then some obligations of the GDPR will not apply to you (for example the appointment of a Data Protection Officer ('DPO')). Note that ‘core activities’ should include activities where the processing of data forms an inextricable part of the controller’s or processor’s activities.

Examples

When the regulation applies

Your company is a small, tertiary education company operating online with an establishment based outside the EU. It targets mainly Spanish and Portuguese language universities in the EU. It offers free advice on a number of university courses and students require a username and a password to access your online material. Your company provides the said username and password once the students fill out an enrolment form.

When the regulation does not apply

Your company is service provider based outside the EU. It provides services to customers outside the EU. Its clients can use its services when they travel to other countries, including within the EU. Provided your company doesn't specifically target its services at individuals in the EU, it is not subject to the rules of the GDPR.

Re: Interesting decision

Doctor Syntax

I don't think the judgement actually comments on this (at least it didn't before my eyes glazed over) but the implication seems to be that they knew, or at least assumed, some dollar subs were already coming from the EU and the subsequent half dozen UK or EU subs might only be a subset of those.

msobkow

Mental note: Never accept payment in anything but Canadian or US dollars.

The rest of the world is nuts...

Anonymous Coward

Like any smart squirrel, I only accept payment in acorns.

Kevin Johnston

Would those acorns be the whole atom or just one electron?

Chloe Cresswell

10 electrons, or one BBC model b... ;)

Any business

Missing Semicolon

So any business that has a switch on its web site to show prices in £ sterling is now subject to GDPR? News to AliExpress and the like, methinks.

Lord Justice Warby has form on inventing new law by precedent.

Re: Any business

Chris G

Aliexpress like many other businesses are subject to more than just GDPR, they ate also obliged to collect VAT at point of sale now, something that has come in within the last year.

That also applies to eBay when for example buying items from eBay.com (US) for shipment to Spain.

Re: Any business

Quando

Some Patreon subscriptions listed in £'s are subject to VAT too - I have two in £'s, one gets VAT added the other doesn't. Not sure about $ subscriptions as I don't have any of those.

Re: Any business

Doctor Syntax

"Lord Justice Warby has form on inventing new law by precedent."

That's the nature of the job and, in fact, the law.

Six that is a lot

Snowy

Where they taken out before or after they allegedly libelled him in a series of stories?

Would be funny if it turned out the Patreon subs where taken out by him or people know to him when he tries to sue and failed.

My problem lies in reconciling my gross habits with my net income.
-- Errol Flynn

Any man who has $10,000 left when he dies is a failure.
-- Errol Flynn