Here is the last case in our trio:

MLS Database – As a follow-up to our earlier post ( Data Mining Decision), you may recall the story of a real estate broker who tried to repackage the MLS listings controlled by the Toronto Real Estate Board (TREB).  The TREB controls the database for residential resale listings (the MLS database) for its approximately 25,000 member real estate agents and brokers.  Fraser Beach was one such broker who developed a workaround to pull the data from TREB’s database, and then redisplay it to the public through his own site.  The TREB cut off his access and Mr. Beach sued the TREB. The court agreed that the TREB was justified in terminating access since this “end-run” violated the authorized use terms that Mr. Beach had agreed to as a member of the TREB. In Fraser Beach v. Toronto Real Estate Board, 2010 ONCA 883, decided in December 2010, the Ontario Court of Appeal upheld this decision. 

Lessons for business? The TREB’s well-drafted Authorized User Agreement specified that use of the database was permitted “for the purposes expressly specified in this Agreement and for the exclusive and internal use by Authorized User“. This was critical to the court’s conclusion that Mr. Beach’s use was a violation of these terms. Companies in the business of licensing database access should take care to have their licenses and authorized use terms reviewed to keep up with technological advances and new methods of obtaining unauthorized access to the data.

Calgary – 07:00 MST

 

Here is the next case in our trio:

BlackBerry – Consider the problems faced by Canada’s world-leader in mobile devices. You open an app store to compete with Apple, so the little guys can develop interesting apps. The problem is, little guys keep developing interesting apps. In Research in Motion Ltd. v Kik Interactive Inc. [Statement of Claim available here], filed in November, RIM sued Kik, an upstart messaging service that had grown wildly popular in the previous several weeks (over 2 million Kik users reportedly signed up within the space of a month). In its suit, RIM alleges patent and trade-mark infringement as well as misuse of confidential information – (the principal of Kik is a former employee of RIM) – and privacy violations.  This shows the difficulty of controlling ex-employees and independent developers, and RIM is not alone. Apple has booted apps that mimic its own core services or threaten the bottom-line (most famously, Google’s VOIP apps). 

Moving to India, RIM faces another challenge in the form of Bharatberry, an app created by an independent Indian developer that provides an “India-compliant solution to the existing users of the BlackBerry® service in India”, and appears to piggy-back on BlackBerry hardware to run a parallel email and messaging service through its own servers, rather than through RIM servers.  This service was developed in the wake of concerns that the BlackBerry service would be disrupted in India if RIM did not solve the Indian government’s demands to have access to RIM’s encrypted e-mail traffic.

 

Calgary – 07:00 MST

 

We’ll review a trio of cases that illustrate the line drawn by the law when software users try to do an end-run around a software owner:

World of Warcraft (WoW) – Blizzard is the publisher of the popular WoW multiplayer game. MDY sold an autopilot bot marketed as “Glider“ that automatically played the lower levels of WoW, to enable a player to graduate to higher levels and earn points.  In a fascinating case (MDY Industries v. Blizzard Entertainment), Blizzard sued MDY for sales of this “Glider” bot. In the course of the cat-and-mouse tactics between Blizzard and MDY, Blizzard prohibited the use of bots in its Terms of Use, and then deployed bot-detection software to block Glider-users. The US Court of Appeals for the 9th Circuit said that the antibot provisions were covenants rather than conditions. “A Glider user violates the covenants with Blizzard, but does not thereby commit copyright infringement because Glider does not infringe any of Blizzard’s exclusive rights. For instance, the use does not alter or copy WoW software.” Thus, Blizzard failed in its copyright claims. 

However, the court decided that MDY was liable for a DMCA violation with respect to WoW’s “dynamic non-literal elements”. The term “dynamic non-literal elements” refers to the copyright-protected elements of the game other than the written code that are created in the course of dynamic play by user. The court upheld the permanent injunction against MDY.

Lessons for business? In Canada, we don’t have an equivalent of the DMCA, though the proposed changes to the Canadian Copyright Act contain anti-circumvention rules of the type that caught MDY in the WoW case. Software publishers and vendors should ensure that their end-user terms or acceptable use policies are well-drafted and up-to-date to guard against this type of indirect access. This may not allow a software vendor to access copyright infringement remedies, but will provide a contractual remedy.

Cases 2 and 3 up next. 

Calgary – 07:00 MST

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Thanks 2010, intellectual property and internet law had an interesting ride. Here are a few issues to watch in 2011:

Canadian Copyright Reform and Anti-Spam Law:  Around this time last year, we predicted that copyright reform wouldn’t come to Canada until 2011 at the earliest. So far that appears to be holding true. However, Canada did make headway in the anti-spam department, with the passing of the Fighting Internet and Wireless Spam Act (hardly a poetic name, but we’ll take what we can get from Ottawa).  Canada’s anti-spam legislation received royal assent on December 15, 2010.  Meanwhile, the Canadian copyright reform bill was introduced in 2010 and the debate will continue when Parliament resumes at the end of January.

And the courts continue to tackle copyright issues piece by piece. News came in late December that a copyright “fair dealing” case will be going to the Supreme Court of Canada in 2011 (SOCAN v Bell).

Clean Tech Law: 2011 may prove to be a break-out year for Canadian Clean Tech companies, as private investment and government incentives provide a boost to companies in this technology-intense sector.  The law surrounding the uses, protection and licensing of clean technologies in Canada will gain traction in 2011.

App Law: This fascinating area of law shows no signs of slowing, as app developers continue to push the boundaries in their use of copyright materials, trade-marks and personal information of consumers, as the technology gallops forward. In December another iPhone-related class action suit was announced, naming Apple and a number of app developers as defendants (Lalo v. Apple, Inc et al, case 5:10-cv-05878).

Business Method Patents: We predicted that some clarity would come out of the Bilski review (in the US) and the Amazon 1-click patent (in Canada). In the US, the Supreme Court handed down its decision in the Bilski review, generally upholding the lower court decision, but cautioning that the machine-or-transformation test is not the only patentability test to be applied.  In Canada, the decision in October in the Amazon case upheld the patentability of business method patents, but the waters were immediately muddied again, when it was announced in November that the decision was being appealed (See: Amazon Business Method Case to be Appealed).

Calgary – 07:00 MST

 

The long-running battle between two of the app industry’s biggest players has settled: Zynga v Playdom (acquired in the summer by Disney). This lawsuit, in many ways, illustrates the battle for dominance in a highly competitive industry like app development, and included allegations against former employees of misappropriation of trade secrets, breach of contract, and breach of the duty of loyalty… even a threat of a jail time for one of the employees. For a more staid Canadian equivalent, see: RBC v. Merrill Lynch. That case dealt with bank employees, so it lacks the flair of social gaming, but is a good Canadian example of the duties of departing employees.

Related reading: Departing Employees & Trade Secrets

Calgary – 09:00 MST

 

My article on the Legal Implications of App Development [Download Copy of Article (2MB PDF)] is published in the November 19th edition of The Lawyers Weekly. It discusses “app law“ issues such as end-user licensing, copyright disputes, app-related trade-mark issues, trade-secrets, privacy and app development agreements.  [Link here for a preview of the digital edition]

Calgary – 09:00 MST 

 

Here are two more interesting cases involving apps for sale through the App Store. These cases arise from an alleged breach of open source software licenses. In this case, the open source code was licensed under the terms of the GPL. When GPL-licensed code is used or embedded in an iPhone app, does the licensing of that app through Apple’s iTunes terms and conditions result in a breach of the terms of the GPL? 

• In the first case, relating to an OSS application known as “GNU Go”, the Free Software Foundation complained that the licensing of the iPhone version through the App Store was a violation of Section 6 of the GPL. In response to the complaint, Apple simply removed the app. the FSF complains that Apple’s remedy is to “disappear” the app (as though they are a military junta… some might take that view), rather than licensing the app under the GPL.
• The second case involves the VLC Media Player, an OSS application ported to the iOS platform. Again, there was a complaint and an allegation of copyright infringement against Apple, on the basis that the GPL was breached. This app is (as of early November) still available in the App Store. 

Apple is not blind to the issue. In fact, Apple’s agreement with its developers is clear that apps should not violate the terms of any open-source licenses, and the developer will be liable for any such violation. One idea is for developers to invoke their contractual ability to use their own end-user terms, and insert the GPL at that juncture, subject of course to the mandatory terms imposed by Apple, that all end-user licenses must contain.  This would be up to the developer to implement, not Apple.

Calgary – 08:00 MT

Last year, app-developer Storm8 made headlines when allegations surfaced that it gathered the phone numbers from its end-users’ phones without authorization, through software built into its iPhone apps.  The case of Turner v Storm8 LLC, (Case No. 09-cv-05234-CW) (N.D. Cal.) represented a nationwide class of persons who downloaded and accessed Storm8 games. That class action has now reached Settlement.

Calgary – 09:00 MT

 

A television production company noticed that audio-clips from its popular TV show were being used in a new iPhone app called “Chopper Soundboard”. (Follow-up story here) While this was an Australian company, the issue is also a common one in both Canada and the US, as owners of copyright content notice that iPhone and iPad developers will “borrow” content – images, video, audio – for use in their apps.

For the copyright owner, the practical question is usually resolved when the app is removed from the iTunes store. A relatively easy remedy, but one that does not address the copyright issues.

The main legal question – which has not yet been settled in court – is who has responsibility for the infringement?  Copyright owners have launched litigation against Apple (for example, the Australian production company Jigsaw Entertainment has made noises about a lawsuit against Apple; photographer Louie Psihoyos has sued Apple in the US for copyright infringement arising out of an iPhone app), and largely left the developers out of their cross-hairs.  However, the Agreement that developers sign with Apple is clear that developers take on the liability in the event their app infringes someone else’s copyright.

Developers: Be aware of the scope of your liability with Apple, and review the agreements with your own customers. Take care when collecting content for your app. Original or properly-licensed content will reduce risks of future copyright issues.

Copyright owners: If content is being used without authorization, get advice on the options you have for remedies under the Copyright Act.

Calgary – 11:30 MT

 

ipblog.ca will be taking a break over the summer. We’ll be back in the Fall to pick up developments such as:

• Canadian Copyright Reform (with Parliament breaking for the summer, there will be no further Parliamentary debate on Bill C-32 until September);
• The US Supreme Court’s decision in the Bilski case (relating to patentability of business methods and software);
• Changes to the Canadian rules in assessing patentability for “computer-implemented inventions”;
• The Canadian Intellectual Property Office’s plans to expedite the examination of so-called “green technology” patent applications;
• Developments in licensing, trade-marks, internet law and trade-secret law.

Have a good summer. 

Calgary – 09:00 MT

The Electronic Frontier Foundation has published an interesting article on Apple’s iPhone Developer Program License Agreement under the (strange) heading “All Your Apps Are Belong to Apple“ which is garbled from both a grammatical and legal perspective.  The Developer Agreement has some zingers in it, to be sure, but it certainly doesn’t claim any ownership over developers’ apps.

If you are a developer, you own your apps. (Section 3.1 of Schedule 1: “…Apple shall not acquire any ownership interest in or to any of the Licensed Applications or Licensed Applications Information, and title, risk of loss, responsibility for, and control over the Licensed Applications shall, at all times, remain with You.”)

Calgary – 08:00 MT

The iP3 Forum in Toronto on June 21, 2010 provides an arena to discuss the potential of Apple’s Touch Platform. A business track provides analysis and insights on how to leverage the Platform’s market potential. The technical stream gets into the details of designing and app development.

I will be speaking on the subject of “App Law: The Legal Side of Mobile Apps” including a review of the law of iP3 Apps, copyright issues, trade-mark issues, intellectual property ownership,  and a review of app licensing.  I also look at tips for mitigating risk under app development agreements, and an update on the latest in app lawsuits.

For registration details, see: This Link  

Calgary – 08:00 MT

 

 

The Canadian government has introduced the next version of its long-awaited and much-debated copyright reform bill (Bill C-32, the Copyright Modernization Act). Here are a few interesting highlights:

• Format & Time Shifting: (Sections 29.22 and 29.23) The new law would allow consumers to “format shift” music from commercial CDs to hard-drives, iPods or other devices. It would also permit “time shifting” of TV programs. However, this right does not override the anti-circumvention restrictions. Put another way, if you have to crack a digital lock in order to make the shift, then you can’t legally shift. 
• Back-Ups:  (Section 29.24) The proposed law allows users to make backup copies, but again, this right is subject to the anti-circumvention restrictions. It’s hard to find a commercial DVD now that doesn’t have digital locks, which means that in practical terms, any back-ups of personal DVDs would have to break a lock, would violate the anti-circumvention restrictions, and would thus be prohibited under the new law.
• Software Interoperability: (Sections 30.61 and 41.12) Interestingly, the anti-circumvention rules do not apply if you want to circumvent a digital lock on software, “for the sole purpose of obtaining information that would allow the person to make the program and any other computer program interoperable”.  This need not be for personal use… so does this mean that competitors can legally hack each other’s code for the sake of interoperability?
• The YouTube Exception: (Section 29.21) There is an interesting exception for “Non-commercial User-generated Content”. Basically, if you construct a mash-up using bits of copyright-protected material, then this kind of creation will not infringe copyright, as long as it is for personal use and doesn’t have a “substantial adverse effect, financial or otherwise, on the exploitation or potential exploitation of the existing work”.   
• ISP Liability? (Section 27(2.3)) This new section might be called the Anti-Napster provision since it makes clear that copyright will be infringed by anyone who provides an Internet service that is designed “primarily to enable acts of copyright infringement”.  This raises the question of the liability of Internet Service Providers, though some language has been sprinkled in to provide comfort to ISPs. 

Before it becomes law, it must pass through Parliament and withstand any lobbying efforts by industry and consumers.

Calgary – 14:30 MT

Can you get a trade-mark for .doc, .pdf or other file extensions?  The makers of AutoCAD software are pursuing trade-mark protection over the file extension .dwg (referring to “drawing”), which is the file format for the AutoCAD software product. In the US case Autodesk, Inc. v. Dassault Systemes Solidworks Corp., 2009 WL 5218009 (N.D. Cal. December 31, 2009), the Court has made it clear that file extensions are functional and thus cannot be protected as trade-marks.

What about in Canada? Autodesk is also pursuing trade-mark protection for the DWG mark in Canada, and the application has been allowed.  No Canadian decisions have considered the specific question of claiming trade-mark rights over a file extension.  However, Canadian law accords with US law on the topic of functionality.  In the Supreme Court’s famous decision in Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65 (CanLII), (the Lego case), the Court denied trade-mark protection for the shape of Lego building blocks on the grounds that the shape of the blocks is purely functional in nature, and thus cannot be protected as a trade-mark.

Calgary – 08:00 MT

Former basketball star Ed O’Bannon and former quarterback Sam Keller have now joined forces in a multimillion-dollar federal class action lawsuit that is proceeding in the US against the National Collegiate Athletic Association (NCAA). The lawsuit has been joined by 15 former NCAA basketball and football athletes.  Collegiate sports is big business in the US and the NCAA generates significant revenues from merchandising and licensing. The NCAA’s defence is that athletes like O’Bannon waived all their commercials rights when they signed a form authorizing the NCAA to use their images for promotional activities.  The lawsuit alleges that the NCAA is improperly profiting by using athletes’ images in video games such as the Electronic Arts title NCAA Basketball ’09. 

If you are considering using any personality or likeness in a video game or smartphone app, ensure you get proper legal advice on well-drafted written authorizations.

Link to: Consolidated Class Action Complaint (PDF) 

Related Reading: Video Games & Free Speech  

Calgary – 07:00 MST

A game developer incorporates martial arts moves into a new video game. Is the choreography of those moves protectable by copyright?   The answer is, apparently, yes. 

The 1997 decision in Ahn v. Midway Manufacturing Co., 965 F. Supp. 1134 (N.D. Ill. 1997) decided that under US law, certain martial arts routines fell within the subject matter of copyright.  In that case, a software developer hired dancers to create moves which were later incorporated into the well-known game “Mortal Kombat”. A dispute arose about the ownership of the routines, but the dancers had assigned their rights to the software developer under a written contract, so they could not maintain a claim for joint ownership.  The 2005 US decision in Open Source Yoga Unity v. Choudhury, 2005 WL 756558 (N.D. Cal. Apr. 1, 2005) suggests that yoga moves can be eligible for copyright protection.

Does this apply in Canada as well?  Yes, in Pastor v. Chen, 2002 BCPC 169 (CanLII), the court reviewed a dispute about dance routines, and decided that the “uniquely choreographed moves and dance styles” were properly covered by copyright.  Game developers should take care to get advice whenever incorporating choreographed elements into their applications.  And the next time you’re on the dance floor, just be sure not to infringe the copyright in anyone’s new dance moves.

Calgary – 09:00 MST

 

Earlier this year, iPhone app developer Zynga Game Network Inc. sued rival game-maker Playdom Inc. and a number of ex-employees in California state court. Among the causes of action were: misappropriation of trade secrets, breach of contract, breach of the duty of loyalty, tortious interference with contracts and unfair competition. Zynga alleges that Playdom hired away four key employees who allegedly took with them key information and planning documents when they left Zynga, including “The Zynga Playbook”, a document which would contain valuable trade secret information in the fiercely competitive app industry. The court granted an initial request for a temporary restraining order against Playdom and the other defendants. Those defendants are prohibited from destroying any of the files allegedly misappropriated. (To see the court documents, link here.)

Under Canadian law, the misappropriation of trade secrets has been scrutinized in several high-profile cases, including the RBC v. Merrill Lynch case, where virtually all of the investment advisors at an RBC branch joined competitor Merrill Lynch.  The law is clear that departing employees owe a duty of “good faith” to their employer, and can also owe a  “fiduciary” duty – a special category which applies to employees such as senior managers, executives, directors and officers.  In the RBC case, the departing employees were not fiduciaries, and had the legal right to leave RBC and to compete with their former employer. But note that employees owing a fiduciary duty will be held to a higher standard.

The lessons for business? Ensure your standard employment agreements contain appropriate non-competition and confidentiality clauses to prevent unfair competition and improper use of confidential information.
Calgary – 14:00 MST

We’re launching applaw.ca.â„¢

Businessweek’s recent article “Inside the App Economy“ shows that mobile applications are evolving from a geek-niche to a powerful industry sector. Not convinced? Consider the case of Zynga, a US app developer that has gone from zero to $100 million in revenues in just 2 years. Canadian app developers are also ringing up sales through the iTunes store.  Fortunes are being made 99¢ at a time. As more platforms, smartphones and mobile devices come on-stream - including BlackBerry, Palm, Android, Google, Yahoo, Facebook - the industry will continue to grow.

This brings us to the emerging body of “app law” that is being articulated by the courts, as developers jostle for position in the marketplace. Richard Stobbe will be presenting to the Vancouver iPhone Forum on November 24th on the subject of app law and intellectual property issues in Canada.  Bookmark applaw.caâ„¢ on your iPhone, BlackBerry, Palm or other mobile device for continuing updates in this field.

Calgary – 09:45 MST

Can a video game portray a character that looks like you, without your permission? There have been a number of disputes over the right of video-game publishers to use a person’s likeness – for example, the dispute over Kurt Cobain’s avatar in Guitar Hero 5, or the recent lawsuit over whether the images of certain professional boxers can be used in a video game. 

In a recent US case (Brown v. Electronic Arts Inc., Case No. 2:09-cv-01598 (US District Court, Central Cal.)), retired football player Jim Brown sued Vancouver-based EA over its use of his likeness in the popular Madden NFL game. This isn’t the first lawsuit over the use of football players’ images – last year, a group of players successfully sued the National Football League Players Association for claims arising out of royalty rates for the use of players’ images in EA games.  In the Brown decision however, the court rejected Brown’s complaint. 

In the US, video games are a form of protected expression qualifying for a free-speech defense, and EA made a successful free speech defense to this claim. 

The case turned in part on the fact that the character in the game was one of thousands of “virtual athletes”.  This particular character may have outwardly resembled Brown to football fans (they would have recognized his jersey number and designation as a running back), but Brown’s name was not used in the game or in advertising. If EA had made any of these mistakes – using his name or likeness in advertising – then they likely would have been tripped up by Brown’s Lanham Act complaint. This claim is based on the idea that an advertiser can’t falsely claim that a celebrity has somehow sponsored or endorsed their product.  EA did not attempt to signify that Brown endorsed the games, so EA did not get tackled by the Lanham Act claim.

Calgary – 13:45 MST

Recent news articles from Newsweek and cnet report that the US military has deployed the iPod Touch and iPhone in the battlefield, as a user-friendly, multifunction device to assist soldiers with communication, translation, intelligence-gathering, logistics and training. Sorry, guys, but you’ll have to read the fine-print. The iPod Touch software license clearly says:

“The iPod Touch Software and Services are not intended or suitable for use in situations or environments where the failure or time delays of, or errors or inaccuracies in, the content data or information provided by the iPod Touch Software or Services could lead to death, personal injury or severe physical or environmental damage, including without limitation the operation of nuclear facilities, aircraft navigation or communication systems, air traffic control, life support or weapons systems.”

And you thought the Apple lawyers were just being over-zealous when they drafted that clause.

Calgary – 09:45 MST