A few weeks ago, Facebook attempted to revise its Terms of Service – the online contract that governs the relationship with Facebook users.  Revising a contract can be tricky at the best of times, let alone an online contract with 175 million users from around the world. 

When word leaked that someone had actually read the fine print, and the fine print extended Facebook’s rights to user content, there was a groundswell of protest, and a quick retreat by Facebook.  Yesterday the company reverted to its old Terms of Service, and users claimed victory.  However, the fine print, even in the old Terms of Service, still permits Facebook to use your photos, profiles (including name, image, and likeness), messages, notes, text, information etc. “for any purpose, commercial, advertising, or otherwise, on or in connection with the Site or the promotion thereof...”  This expires when you remove your content, but millions of users have still granted Facebook extremely broad rights to their personal information and images, so it is interesting that these terms are being considered a triumph. (What was that one about the frog in boiling water?)

Under Canadian and US law, a company must be very careful to ensure that amendments to online contracts are enforceable (see: Online Contract Amendment Not Binding).

Calgary – 10:35 MST

The Canadian Intellectual Property Office has announced that the Trade-marks Opposition Board will be changing its practice, effective March 31, 2009, pursuant to the new Practice in Trade-mark Opposition Proceedings. Here’s a summary of the changes:

• The new practice will simplify the procedure and time-lines for granting extensions of time, and will clarify when extensions of time can be granted in exceptional circumstances.
• Parties will be encouraged to mediate and settle disputes early in the process, including through the use of a “cooling-off” period.
• A new practice is introduced for scheduling hearings.

Calgary – 14:30 MST

In January, the federal Privacy Commissioner released Guidelines for Processing Personal Data Across Borders (PDF Copy of Guidelines). These guidelines set out the Commissioner’s view of how the Federal Personal Information Protection and Electronic Documents Act (PIPEDA) will be applied to transfers of personal information across borders. It’s worth noting that the document does not review obligations for public sector entities.  Transborder transfers of personal data would include transfers across provincial as well as national boundaries since PIPEDA does not distinguish between domestic and international transfers of data.  So if your organization is outsourcing data handling to a service provider in another province or another country, these guidelines will be applicable.

Calgary – 10:30 MST

The Government has issued a Request For Information on open source software to assist it in developing guidelines related to the “planning, acquisition, use and disposal of No Charge Licensed Software (NCLS).”  The term NCLS is apparently intended to include all forms of software which is available without charge – from “true” open source software, freeware, shareware, to free proporietary downloads such as Adobe readers, iTunes, Google toolbars, etc.  The RFI closes February 19, 2009.

This obviously reflects the growing use of open source software within the public sector, and the need for consistent guidelines.  The guidelines, once developed, will likely be of interest to both public sector and private sector organizations.

Calgary –  09:30 MST

In a recent story that made national newspapers here, it was suggested that McGill University’s new advertising campaign had somehow stepped on the toes of American Larry Smith, editor of an online magazine.  Mr. Smith raised an allegation that somehow the idea of a six-word summary was protectable under intellectual property laws – trade-marks, or copyright, or something.  Such an idea is certainly not protectable, so McGill has nothing to worry about and Mr. Smith is off-base. 

Calgary – 15:00 MST

The Eastern District of Texas has gained notoriety as a magnet for patent lawsuits.  Plaintiffs will commence lawsuits there with the hope that pro-patent-owner juries will be convinced to decide the case in favour of the patent owner and award significant damages.  The district also has a reputation for moving patent cases along efficiently, which can benefit a well-prepared plaintiff.

The Fifth Circuit Federal Court of Appeals issued its decision in the case of Re TS Tech USA Corp. a few weeks ago, and agreed to transfer a case from the Eastern District of Texas to the Southern District of Ohio, on the basis that the lawsuit had more of a connection to Ohio than Texas.  This could trigger transfers of other patent lawsuits that do not have the required level of connection to Texas. Defendants TS Tech USA Corp, TS Tech North America, Inc. are based in Ohio and the Plaintiff Lear Corporation is a Delaware corporation based in Michigan.

In earlier posts ( Welcome to Texas: Keep Your Powder Dry ; Patent Infringement Update ), we noted cases involving Canadian companies caught up in patent lawsuits commenced in Texas.  The case of Re TS Tech USA Corp. also dealt with a Canadian defenant, auto-parts manufacturer TS Tech Canada, Inc., based in Ontario.  The TS Tech decision is one more strategic tool for Canadian defendants to challenge jurisdiction.

Calgary – 10:00 MST

Some people take their whisky seriously. The Scottish Whisky Association takes the topic very seriously. They were concerned that the use of the word “Glen”, in connection with a Canadian whisky, would mislead consumers into thinking the drink was from Scotland. So concerned, they sued Glenora Distillers, the Canadian distiller of GLEN BRETON whisky all the way up to the Federal Court of Appeal. 

For lawyers, it’s a trade-mark issue: Has the word “Glen” in association with “single malt whisky” become recognized in Canada as designating Scotland as the origin of whiskies? In a decision last year (Scotch Whisky Association v. Glenora Distillers International Ltd. 2008 FC 425 Date: April 3, 2008) the court agreed with the Scotch Whisky Association, and decided that the word “Glen” would confuse consumers.  The court refused to permit Glenora to register the trade-mark GLEN BRETON for single-malt whisky. 

Last week, the Federal Court of Appeal reversed that decision and agreed with the distiller. It’s worth noting that the product is not marketed as “scotch”, but as “Canada’s only single-malt whisky”. The appeal judges decided that the word “Glen” would not mislead consumers, and permited the trade-mark application to proceed. The Scotch Whisky Association is rumoured to be considering an appeal – this time, all the way up to the Supreme Court of Canada.  If they do appeal, the next decision won’t be expected until sometime in 2011, about 8 years from when the contest began. Just enough time to permit the bottling of the next batch of GLEN BRETON 8-year-old single malt.

Calgary – 10:45 MST 

 

In December, the Free Software Foundation (FSF) launched a lawsuit alleging that Cisco has breached the terms of the GNU GPL and LGPL (the General Public License and Lesser General Public License), thereby infringing copyright in the licensed programs. For more information, see the press release and a copy of the complaint filed by the FSF.

Last year in Jacobsen v. Katzer (US Court of Appeals for the Federal Circuit, August 13, 2008), an appeal-level court considered the ability of a copyright holder to distribute software under an open source license, and also obtain a remedy for any breaches of the license terms. In the decision, the court overturned the lower-court decision and decided that the open source license did not permit a licensee to modify and distribute the copyrighted materials without abiding by the copyright notice and modification-tracking conditions.  The case was sent back to the lower level for reconsideration, but it makes clear that:

• the licensor enjoys “economic rights” under the open source license; these “economic rights” come in the form of various intangible economic benefits, even in the absence of traditional royalties or license fees, and
• a licensee is not entitled to disregard the conditions attached to open source licenses.

In early January, a new ruling was issued by the lower court in Jacobsen v. Katzer.  Since the plaintiff failed to specify any damages, the contract claim was dismissed. The court also denied the injunction application (which would have barred Katzer from using the open-source code), on the basis that irreparable harm had not been established.  This shows that open-source licenses will always bump up against the practical realities of commercial litigation: to get a remedy, plaintiffs will still need to show damages and convince the court of the need for an injunction, just like in any lawsuit.

Canadian courts have yet to consider open-source software issues directly, but Canadian law will draw upon this growing body of American caselaw when the time comes.

Calgary – 10:00 MST

Lawyers are often criticized for arguing over semi-colons and prepositions. Here is one case where the word “of” and “in” were debated up to the Ninth Circuit Court of Appeal.

In the recent decision in Doe 1 v. AOL LLC, 2009 WL 103657 (9th Cir. Jan. 16, 2009), AOL was sued in California in a class-action suit.  AOL tried to deflect the California lawsuit based on the “venue selection clause” in its online member agreement.  That clause stipulated that lawsuits had to be brought in the State of Virginia. However, the court refused to uphold the agreement because Virginia state courts do not permit class action lawsuits.  The phrase in the agreement referred to “the courts of Virginia”, which the court interpreted as meaning state court – the equivalent of our provincial courts. If it had referred to “the courts in Virginia” then the court may have agreed with AOL’s argument that this would include both state and federal courts.  In that situation, the agreement would have been upheld, since federal courts permit class action lawsuits. 

The Canadian case of Desjean v. Intermix Media Inc. [2007] 4 F.C.R. 151 (F.C.), also deals with the issue of jurisdiction.  In that case, a Canadian internet user tried to launch a class-action lawsuit against Intermix Media Inc., a California-based company.  The  complaint alleged that spyware and adware were bundled with free software downloaded from the Intermix site.  Intermix did have an online license agreement and defended by arguing that the Canadian Federal Court lacked jurisdiction over Intermix and that the license agreement chose California law. In other words, Intermix argued that there was no “real and substantial connection” between Canada and Intermix. Specifically, the American company had no offices, employees, servers or bank accounts in Canada, and conducted no marketing or advertising in Canada.  The Federal Court agreed with Intermix and the Federal Court of Appeal upheld this decision. 

One more e-commerce case: in Mehmet v. Paypal, Inc., 2008 WL 3495541 (N.D. Cal. Aug. 12, 2008). the court upheld the consequential damages waiver in PayPal’s user agreement. 

The business lessons:

• ensure your online agreements are enforceable; 
• in Canada, laws in Ontario and Quebec deal with online agreements and the right to institute class-action proceedings, so special care should be taken where online customers are located in those jurisdictions;
• the venue selection clauses in online agreements may have to be reviewed in light of the AOL decision;
• even for free downloads, an online license should be put in place to address jurisdiction issues.

Calgary – 11:15 MST

To follow-up on our post last year [IP and Internet Law in 2008 ], here are a few issues to watch in ’09:

US Patent Reform 

Although the US Patent Reform Act of 2007 stalled in the US Senate in 2008, it is expected to be brought back onto the government agenda in 2009 as part of the Obama administration’s plan for innovation.  Look for this to be moved forward once the burning economic issues have been addressed. 

Filesharing 

The recording industry tried multiple tactics in 2008. They pursued file-sharing sites rather than individuals. Their lawsuit against Quebec Torrent resulted in a win-by-default, and it is likely that they will pursue other file-sharing sites in Canada, citing this as a precedent. As expected, the recording industry also made a move against individuals using new anti-piracy legislation.  This trend can be expected to continue in 2009. 

Canadian Copyright Reform

While the government continues to grapple with economic and constitutional issues, it is unlikely that copyright reform will be high on the list.  If we do get a revised copyright reform bill, debate can be expected to drag on until the end of the year. 

Olympic Marks

With the 2010 Olympics coming to Canada in a little over a year, ambush marketing and Olympic advertising will likely generate lots of interesting trade-mark disputes.  As seen in Beijing, the efforts of the Olympic “trade-marks police” will bring this issue to the fore, and will provide an opportunity to test the new Olympic and Paralympic Marks Act.

Calgary – 2:45 MST

 

It’s clear that Microsoft has been monitoring an infringer who made headlines last year when he was hit with a substantial damage award for selling pirated Microsoft software. At the time Mr. Cerrelli, the director of the corporate defendant, was personally liable due to his direct involvement and knowledge of the copyright infringement.  As an update to our earlier post, the Quebec man last week pled guilty to contempt of court for side-stepping the original Federal Court order and selling pirated software through a different company.  He was fined $100,000 for contempt and faces jail time if the fines are not paid. 

 

Calgary – 10:00 MST

Many Canadian companies are hoping that sales to China’s growing consumer class will help cushion the blow of the US economic downturn. Any penetration into the Chinese market will inevitably involve brand battles for consumer products. Take this recent example, where a Chinese distiller was fined for infringing the famous Johnnie Walker Black Label brand. The competing products are pictured – one the original brand and one a Chinese product sold under the brand “Polonius - 12 Years”.  Last month a Chinese court fined the Chinese company 1.25 million yuan (about $225,000 CAD) for infringement of the trade-mark and distinctive shape of the bottle. 

Calgary – 15:30 MST

Can an exchange of email form a contract? To create an enforceable contract, the parties have to intend to be bound by their agreement at the moment the contract is formed. This can happen in different ways, including via email.  In the recent decision in  Basis Technology Corporation v. Amazon.com, Inc. 71 Mass. App. Ct. 29, the court ruled that email communications between the parties’ lawyers constituted a sufficiently complete and unambiguous agreement, and that both parties intended to be bound by that communication of terms.

The court will not look at whether the parties think they have agreed, but what an “objective reasonable bystander would conclude based on all of the material facts.”  If that objective analysis shows that the parties intended to form a contract and the essential terms of that contract can be determined with a reasonable degree of certainty, then the contract will be enforceable.

In Leoppky v. Meston, 2008 ABQB 45 (CanLII), a recent Alberta case, the court concluded that there was an agreement between the parties, formed by a string of emails.

In another interesting twist to this concept, many companies (including internet service providers) reserve the right to amend their “terms of service” by sending the amended terms to customers via email. Last month, AT&T in the U.S. sent out an email notice to its customers, advising of amendments to the standard terms of service.  However, for some customers, AT&T’s own filter identified the email as spam and diverted it into the junk folder.  Depending on the terms, the company might have trouble enforceing the change if challenged in court.

Related Reading: E-Commerce Update

Calgary – 11:45 MST

 

Alberta has produced what appears to be Canada’s first anti-camcording conviction.

Revisions to the criminal code, which target movie piracy in theatres, were used to obtain a conviction against a Calgary man who was banned from movie theatres for a year and fined $1,500. The convicted man was also prohibited from purchasing or owning video recording equipment during his probation period. There does not appear to be any evidence that he was in the business of distributing or uploading pirated videos. The Canadian Motion Picture Distributors Association was apparently pressing for jail time.

Calgary – 20:45 MST

In the battles between generic and brand-name pharmaceutical companies, this decision can be considered a major clarification of the law.

Last week the Supreme Court of Canada (SCC) released its decision in Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61. This patent litigation case centres around so-called “selection patents”. Selection patents claim “an advantage for a compound within a previously disclosed class of compounds which has not been disclosed in the prior patent”, as described by the court. Unlike originating or genus patents, which cover an originating invention involving a new reaction or a new compound, selection patents build on previously disclosed classes of compounds but identify a new use or benefit of the compound undisclosed in the originating patent. In this particular circumstance, Apotex (the generic manufacturer) claimed that one of Sanofi’s selection patents was invalid because it was covered within one of Sanofi’s earlier originating patents. The court disagreed with Apotex and upheld Sanofi’s selection patent. The win is significant for Sanofi since it covers the drug company’s second-best-selling drug, and the patent does not expire until 2012, giving the company 4 more years of monopoly over generic manufacturers.

As for the complaint from generics that big pharma is engaging in “evergreening” to continue their monopolies long past the time intended by the Patent Act, the court stated: “Strategies that attempt to extend the time limit of exclusivity of a patent may be contrary to the objectives of the Patent Act, depending on the circumstances, but a generalized concern about evergreening is not a justification for an attack on the doctrine of selection patents. A selection patent may be sought by a party other than the inventor or owner of the original genus patent so that evergreening does not arise. In addition, selection patents encourage improvements over the subject matter of the original genus patent because that selection does something better than or different from what was claimed in the genus patent.”
Related Reading: Pharma Patent Decision Released

Calgary – 17:45 MST

It was announced last night that Barack Obama will become the next US President. Entrepreneurial Americans across the nation are taking the opportunity to file trade-mark applications inspired by the President-elect. Here are a few of the more interesting ones filed in the USPTO in the last year:

• BROCCOLI OBAMA – filed for “A vegetable recipe”
• OBAMALLAMA – for plush and stuffed toys and political memorabilia
• WHO’S YO’BAMA NOW? – for athletic apparel, namely, shirts, pants, jackets, footwear, hats and caps, athletic uniforms; Button-front aloha shirts
• THE REAL OBAMA GIRL  – for audio and video recordings; digital music downloadable from the Internet
• OBAMA BABY – for customized imprinting of company names and logos on promotional merchandise, apparel and corporate gifts
• OBAMANOS! – for imprinting messages on wearing apparel, accessories and mugs
• IRISH FOR O’BAMA – Bumper stickers
• OBAMANATION – for yoga/exercise pants, loungewear and scarves
• O.B.A.M.A. OUR BEST ANSWER FOR MANAGING AMERICA – for T-Shirts, Sweaters, and Hats.

And my personal favourite:

• BEARAK OBAMA – for teddy bears

Now if only Canadian politicians inspired such branding activity.

Calgary – 11:20 MST 

When are domain names so descriptive or generic that they can’t function as a trade-mark? 

A Montreal lawyer registered and used the domain name canadavisa.com for immigration law services.  He then challenged the owner of canadavisa.ca claiming that the use of the dot-ca domain name for similar services would constitute bad faith contrary to the dispute resolution policy.  In a recent arbitration decision Cohen v. 3824152 Canada Inc. the panel decided that CANADA VISA cannot function as a trade-mark for services related to obtaining visas for Canada, since under trade-mark law both CANADA and VISA would have to be disclaimed as being purely descriptive of the services.  Since the domain name could not function as a “mark” under the rules, the complaint failed. 

Compare this with the recent complaint by a Toronto realtor who used yourcommunityrealty.com.  The realtor complained about the registration of yourcommunityrealty.ca, which was directed to a page featuring ads for competing realtors.  Is YOUR COMMUNITY REALTY generic for real estate services?   In the decision Risi v. Fattahi, the panel relied on the complainant’s Canadian trade-mark registrations for YOUR COMMUNITY REALTY.  Because she had chosen a slightly more distinctive mark, and had taken the step of registering trade-mark rights several years before, the complainant avoided the problem of proving distinctiveness or acquisition of secondary meaning (the problem which foiled the complaint in the Canada Visa case).  The complaint was successful.

In the recent Trade-mark Opposition Board decision in London Drugs v. Total Care Pharmacy (April 28, 2008), the board refused to permit the registration of the proposed mark CROSSBORDERPHARMACY.COM for an online pharmacy because the mark was clearly descriptive.   

There are several lessons for business:

1. A domain name does not need to be distinctive to be successful as a website address (canadavisa.com reportedly enjoyed popularity as a site), but without a distinctive element, the domain name cannot function as a trade-mark and this will always limit enforcement options in the case of infringement or domain name disputes;
2. Trade-mark registration can be a very useful tool – in the Community Realty case, the complainant could likely have pursued a trade-mark infringement case, but the domain name arbitration was cheaper and quicker, and the trade-mark registration proved critical for success in that venue;
3. Defensive domain name registrations are also good practice: if the owner of canadavisa.com had registered the dot-ca and other variations as a defensive measure, then the lack of distinctiveness would be irrelevant.

Related post: Update: Generic Trade-marks 

Calgary – 11:00 MST

We have previously commented on the series of defamation lawsuits  commenced by Wayne Crookes.  These lawsuits are resulting in court judgements which have established some guidance in this emerging area.  The latest decision, Crookes v. Wikimedia Foundation Inc., 2008 BCSC 1424 has established that linking to defamatory content does not, in itself, amount to publication of that content.  In other words, the publisher of an article which links to the defamatory content, without reproducing it, is not liable for the defamation. The court stated that “the mere creation of a hyperlink in a website does not lead to a presumption that persons read the contents of the website and used the hyperlink to access the defamatory words.”  And the court went on to say that “reference to an article containing defamatory content without repetition of the comment itself should not be found to be a republication of such defamatory content”.

The court’s analysis refers to evidence of whether anyone linked to and read the defamatory content, leaving open the question of whether different facts would have resulted in a different conclusion.  Liability may arise where there is ample evidence that numerous readers used the link to access the defamatory content, or in a situation where the linked content is used to refer directly to the defamed person.  The court speculated that if an article states “the truth about [the defamed person] is found here” and “here” is hyperlinked to the specific defamatory words, then the publisher of the article may be liable.

There was also a recent defamation decision in Ontario, giving rise to $50,000 in damages for online defamation.

A third decision, in Manson v. Moffat, [2008] O.J. No. 1697, resulted in a damage award of $20,000 for internet libel, and an injunction was issued against the U.S. defendant.  The case arose from false statements posted online relating to the plaintiff’s patent.

Calgary – 10:00 MST

It is very common for Canadian companies to expand their customer base into the US, and it is also common for Canadians to encounter difficulties when they discover that they have the same brand name as a US competitor. Trade-mark law permits the same trade-mark to owned by different companies in different countries. But internet marketing blurs those lines, leading to trade-mark disputes and turf wars.

An American court has saddled a Canadian company with “corrective advertising compensatory damages” or what might be termed “Google damages”. The decision in Punch Clock Inc. v. Smart Software Development, No. 07-61684 (S.D. Fla., April 7, 2008) started as a complaint by the owner of PUNCH CLOCK, a US trademark registered for payroll and time-keeping software. The Canadian defendant marketed a competing product in Canada, also under the mark PUNCH CLOCK. When the US company launched a lawsuit in Florida, the Canadians changed their mark to LION CLOCK, but they never responded to the lawsuit, and the US company won a default judgment.

The US company complained that Google searches for the terms “punch clock” produced results that listed the Canadian website above the US company’s site. Alexa searches also showed that the traffic rank for the Canadian website was much higher than for the US company’s site. As a result, the court awarded seven years worth of “corrective advertising” – specifically, the Canadians were ordered to pay the cost for the US company to purchase top placement of its website on Google search listings for five keywords for seven years. At $136 per day for seven years, the corrective advertising damages totaled $347,480, which the court tripled to $1,042,440, on the grounds that the infringement was willful.

Corrective advertising is not a new concept, but it has traditionally been employed in consumer-protection situations where it is ordered to counter false advertising. In this case, it is hard to see why one company should have a “right” to be at the top of Google search results.  There are many reasons why a site enjoys higher or lower rankings on Google search results that have nothing to do with infringement, and the court’s effort to push an aggrieved party to the top of Google’s ranking seems a bit misplaced.  Nevertheless, Canadian companies need to be aware of this risk when facing trade-mark disputes south of the border.

Calgary – 11:30 MST

The Canadian Intellectual Property Office has introduced amendments to the Industrial Design Regulations which are effective October 5, 2008. The changes allow for greater flexibility in submitting design applications with respect to the colour and size of images, and permit the filing of colour drawings and photographs. There is also more flexibility to include an article’s “environment” (i.e. subject matter that is not part of the article) in the drawings. The amendments are posted at the Canada Gazette website and a summary is listed in the FAQ section of the CIPO site.

Calgary – 10:40 MST