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A California court has approved a nationwide class action lawsuit against Apple, based on claims that the device has tracked user location and movements without their consent. This is the same claim that was dismissed once, with leave to amend (see App Law: Update on Privacy). The plaintiffs amended and came back for round two. In a partial win for Apple, the privacy claims were dismissed. However, the remainder of the claims have been permitted to proceed. Apple’s defence is that its terms of service and user agreements will provide cover. The court has indicated that there is some ambiguity about whether the terms cover the scope of information that was collected.

For Apple’s lawyers, this is not a new phenomenon. These lawsuits are also in the works:

• A class action lawsuit related to iPods;
• Customers are trying to get a class-action for iTunes refunds;
• A class action based on false-advertising claims related to Siri.

However, the user-tracking lawsuit looks like the most interesting of the bunch, and may put Apple’s app store terms and conditions to the test.

Calgary – 07:00 MDT

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ICANN has revealed the applicants for new generic top-level-domains (gTLDs). (See our earlier post: Let a Thousand .Flowers Bloom? Update on New gTLDs ) This is the list of companies and organizations that want to run their own domain registry, though the new domains have not yet been approved by ICANN. Some points to note:

• Many of the applicants will walk away empty-handed. For example, there are 12 applications for the .APP domain, and only one one of them will be awarded the right to establish that domain.
• A number of global trade-mark owners have staked their claim in this new space – for example, the owners of the APPLE, AUDI, FORD and AMERICAN EXPRESS brands have each applied to establish these brands as gTLDs.
• Yes, someone has applied to establish .FLOWERS, as predicted in our earlier post… there are four applications for this domain.
• Some brand owners have elected to go with generic applications – for example, both Safeway and Walmart applied for .GROCERY
• Internationalized domains are part of the list, including 삼성 (That’s SAMSUNG in Korean).
• Google appears to be among the most enthusiastic applicants. They established a separate company – Charleston Road Registry Inc. – to apply for more than 100 top-level-domains.

ICANN is pitching this as “The day it all becomes clear”, but the process is far from it. An “objection period” for new gTLDs now begins and ICANN states that this period “is intended to remain open for approximately seven months”. Not exactly clear. The proposed “Trademark Clearinghouse” is also not yet established, though this will be critical for brand owners to manage rights protection issues when the new registries are launched. Stay tuned.

Calgary – 11:00 MDT
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In the copyright and patent infringement lawsuit between Oracle and Google (we posted on the copyright aspects here: Copyright Protection for APIs and SDKs and APIs: Do they have copyright protection?), a decision was reached last week by the jury on the patent side of the claim. The jury has determined that Google did not infringe the two patents that Oracle held for its Java system. This leaves the Oracle case in tatters, with no real prospect of meaningful damages, even in light of an earlier finding that Google infringed Oracle’s copyright in the Java APIs. The copyright side of the claim is still muddled – the judge has not yet decided the issue of whether APIs can be the subject of copyright protection, and the jury failed to agree on whether Google had a “fair use” defence to the copyright infringement that did take place… assuming that APIs can enjoy copyright that is capable of being infringed.

Still with me? We might expect some clarity on the copyright issue if the judge issues a determination on copyrightability. What’s more likely is that the patent decision is appealed and the copyright decision is sent back down for a retrial, leaving the entire issue unresolved.

Calgary – 07:00 MDT

 

As a follow-up to our earlier article (SDKs and APIs: Do they have copyright protection?), the jury in the Oracle v. Google lawsuit issued a decision last week that Google’s Android software infringed copyright in the overall structure, sequence and organization of Oracle’s Java code. However, the jury failed to return a decision on Google’s “fair use” defence. Oracle’s main complaint was that Google’s Android software used Java code – in particular, 37 Java APIs (application programming interfaces) – that was not properly licensed from Oracle. Google has maintained that the use of any Java APIs in Android is protected by a “fair use” defence.

You’d think a jury decision would be a step forward. However, the issue of copyright protection of APIs remains unsettled, since the jury merely assumed copyright protection for the purposes of this issue, without a clear decision by the court on that point. The failure to decide on the “fair use” defence also leaves the issue open. The jury was deadlocked on that question, potentially leading to a mistrial. Indeed, Google filed for a new trial last week.

This jury decision is really just a way-station on the road… a very long road. The next phase of the lawsuit will deal with Oracle’s patent infringement claims; which will be followed by a further hearing to determine any damages. Stay tuned.

Related Reading: Copyrightability of Java APIs would be consistent with law and practice, not a ‘substantial departure’ for industry (FOSS Patents)

Calgary – 07:00

 

Virtual desktops running on the cloud (Desktop-as-a-Service or DaaS, if you need another acronym) have delivered desktop-style computing to mobile devices such as iPads and Android tablets. This is a way to remotely access the full functionality of a desktop (such as track-changes in MS Word, which is currently impossible on an iPad). This is the subject of a recent spat between OnLive, tuCloud and Microsoft. This dispute – a dramatic one in which tuCloud openly dared Microsoft to sue it – has focussed attention on the fine-print in Microsoft’s licensing regime under its Service Provider License Agreement. In a broader sense, it impacts any virtualization. When can a licensee of software deliver virtual access to multiple instances of that software, and how does the software vendor control such access? 

This dispute is one which will be watched closely as it develops. Software vendors should review their terms and their licensing models to ensure that they have contractual terms that match the current virtualization risks and opportunities that come with DaaS. 

For a related event, please join us for “Software Licensing: The Good, The Bad, and The Virtual“ on May 31, 2012.

Calgary – 14:00 MDT 

 

A recent Gmail outage reminds us that the cloud is not always up. What goes up must come down. Servers crash. Companies go bankrupt. When a cloud service provider fails or the technology falters, what happens to the servers that house the data?  Think of where your cloud-based data is hosted… and then try to imagine what it would take to get that data back. In these cases, questions of jurisdiction and bankruptcy law quickly come to the fore.

In the ongoing case involving Megaupload, a court battle is being fought over the servers: who will take conduct of them and what’s to be done with the data on those servers?

The Canadian case of Stanford International Bank Ltd. (Syndic de), 2009 QCCS 4106 (CanLII), also involved a dispute over servers of a bankrupt company. In the Stanford International case, the bankrupt company was offshore. A liquidator acting for receivers based in Antigua sought an order from a Canadian court to confirm the winding-up order. However, the court objected when it discovered that the servers, located in Canada, had been erased by the Antiguan receivers, the data had been copied, and the copies were stored in Antigua. Essentially, the Antiguan receivers removed all the electronic data from the Canadian servers to Antigua, thus removing the data from the jurisdiction of Canadian courts and regulatory authorities.

The number of servers in that case was small enough to permit copying; compare that to the Megaupload case which involves some 1100 servers. No-one wants to incur the cost to house and maintain such a large number of servers, so they are in legal limbo until the court makes a ruling.  

In some cases, the data sits on identifiable servers – you could in theory (if you know where the server farm is located) point to a box and say, that’s where my data is stored. In other cases, such as Amazon’s “Elastic Compute Cloud” Service, high levels of redundancy mean the same data may appear in multiple instances across multiple servers, located in multiple geographical areas. It would be impossible even in theory to determine where the data is physically located. When negotiating mission-critical cloud-computing agreements, take time to consider the issues of what happens when the cloud comes down, and get proper advice for a soft landing.

Calgary – 07:00 MDT

 

When you apply to register a trade-mark in Canada, each trade-mark must be matched with a specific list of wares and services. The Canadian Intellectual Property Office has released an updated list of approved descriptions of services, as part of its Wares and Services Manual for the purpose of paragraph 30(a) of the Trade-marks Act. The new descriptions include:

• Cloud computing provider services for general storage of data
• Cloud computing enabling file storage of payroll data
• Cloud computing web hosting services
• Cloud computing providing software for database management
• Cloud computing video hosting web sites
• Cloud computing photo sharing services

Contact the Field Law trade-mark team for advice on registering your trade-marks for cloud computing services.

Calgary – 07:00 MDT

 

Cloud service providers often want to change online terms in the middle of the product lifecycle. Amendments are typically required due to changes in the law or changes in product functionality. For example, Apple’s introduction of its iCloud service triggered changes to the iTunes terms of use. If users want access to the new functionality, they must assent to the revised terms. It amounts to a midstream unilateral change to the contract. Do these changes hold up in court? Two recent US cases suggest there is a valid way to effect such changes:

• In Fineman v. Sony Network Entertainment (N.D. Cal.; Feb. 9, 2012), consumers objected to Sony’s amendments to the online terms governing the Sony PlayStation Network. The changes were challenged and ultimately upheld in court. 
• In Lebowitz v. Dow Jones & Co., 06 Civ. 2198 (MGC) (S.D.N.Y.; Mar. 12, 2012), a New York court permitted unilateral changes to the terms and pricing for the WSJ Online subscription service. This turned, in part, on the terms of the original contract, which permitted the vendor to make reasonable changes to the terms as long as notice was provided to the user. For further discussion, see Eric Goldman’s post.)
• In Canada, this issue was addressed in the leading case of Kanitz v. Rogers Cable Inc., 2002 CanLII 49415 (ON SC), in which a Canadian court upheld a change in the online terms imposed on Rogers internet customers.

Note: software vendors and cloud service providers need to be cautious about forcing users to waive class-action rights. Such amendments can conflict with local consumer-protection laws. Unilateral changes need to be managed carefully. Get advice before you attempt to impose unilateral changes to ensure the best outcome. 

Calgary – 07:00 MDT

 

If your kids use Facebook, are they bound by the online terms?

This question was recently reviewed in a US decision in which certain minor children, resident in Illinois, were users of facebook.com. They alleged that Facebook’s practice of misappropriating their names and likenesses for “commercial endorsements” without their consent was a violation of their privacy rights. Facebook resisted by invoking the “forum-selection” clause in its Terms of Service (TOS). That clause effectively punts all disputes into California, Facebook’s home turf. The Illinois court had to decide whether the case could proceed in Illinois, or whether the forum-selection clause dictated that the case must proceed in California.

In E.K.D. v. Facebook, Inc., 3:12-cv-01216-JCS (S.D. Ill. March 8, 2012), the Court concluded that the minors could not avoid the forum-selection clause in Facebook’s TOS. A mandatory forum-selection clause is, under US law, valid on its face, and should be enforced “unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.” Canadian law is similar. However, the courts look at a number of factors in determining what they consider “reasonable”, and online vendors or licensors must take care if they want to ensure the clause will be upheld.

Calgary – 07:00 MDT

 

 

Patent infringement damage awards often run into the billions. Not to be outdone, a copyright infringement case between Oracle and SAP resulted in a jury award in excess of $1 billion, based on a “hypothetical license“.

In 2007, Oracle sued SAP for copying thousands of documents and programs from Oracle’s “Customer Connection” website. After years of litigation, the remaining issue for decision by the jury was the amount of the damages. In November, 2011, the jury returned a verdict in favour of Oracle for $1.3 billion. SAP challenged this award as “unduly speculative” and sought a new trial or a lower damage award. Oracle had the choice of accepting a lower damage award of $272 million or going into a new trial; it opted for a new trial which has now been set for June, 2012.

In Canada, the Copyright Act (under Section 35) allows for damages and part of the profits that the infringer made from the infringement or an election of “statutory damages” under Section 38.1. The concept of a reasonable royalty (a rate that the infringer would have paid to the owner in a hypothetical license negotiation) is a concept that has been considered in patent cases in Canada – for example, in Jay-Lor International Inc. v. Penta Farm Systems Ltd., 2007 FC 358 (CanLII), the court calculated damages after analysis of a “hypothetical negotiation”.  The court in Oracle vs. SAP has shown that such a calculation must be grounded in objective evidence, and where possible, actual benchmarks to prove market value. Subjective or speculative evidence should not be used for such calculations.

Calgary – 07:00 MST

 

Snake oil? There’s an app for that. App developers who make baseless health-related claims about their apps may face FTC charges in the US.

In this case, the mobile apps “AcneApp” and “Acne Pwner”, sold in Apple’s iTunes Store and Google’s Android Marketplace, made false health-related claims without scientific evidence. Advertising for the apps claimed to treat acne with colored lights emitted from the phone (“Kill ACNE with this simple, yet powerful tool!”). According to the FTC complaint, almost 15,000 people downloaded the apps. In the FTC settlement, the app developers were fined and were barred from making further unsubstantiated health claims.

Calgary – 07:00 MST  

 

The privacy problem with apps has been percolating for some time. Several high-profile reports have brought attention to this issue; Path’s embarassing privacy breach is just one of many cases where app developers have (intentionally or otherwise) harvested private details about app users by dipping into address books and location-data. App developers should take note: Get legal advice on privacy before you launch your app.

In the US, a patch-work of industry-specific privacy laws has made this a confusing area of law. In Canada, the landscape is still complex, but is underpinned by private-sector privacy laws that apply to “personal information” across all industries, at both the federal and provincial level.

This month, the California Attorney General has entered into an agreement with mobile app platform vendors – Amazon, Apple, Google, Hewlett-Packard, Microsoft and Research In Motion – to improve privacy protections for app users. This arrangement implements certain “privacy principles” and requires app developers to have a privacy policy, something that would bring app developers in line with Canadian law.  This is not new legislation, merely a loose commitment by the mobile app industry, so it cannot be enforced as law. However, it has helped shine a spotlight on this issue. 

Related Reading:

• Copy of the Signed Agreement (PDF)
• App Law: Update on Privacy

Calgary – 07:00 MST

 

My recent article “You Can’t Have Clouds Without a Little Bit of Lightning: Cloud Computing in 2012” is published in The Advisor (PDF) newsletter (Winter 2012).

 

Calgary – 10:00 MST

 

A company approaches you to engage in a “partner” agreement – maybe a joint venture, a licensing deal, a software integration or a reseller arrangement. During negotiations, the other company reviews your technology. Negotiations breakdown when you realize that the other company has launched a competitive knock-off product that looks shockingly similar to your own beta version that you disclosed to them. Now what do you do?

According to app developer Spry Fox this is what happened in their negotiations with app developer LOLapps. LOLapps abruptly broke off negotiations and launched their own app, “Yeti Town” which has similar design elements. In its complaint Spry Fox claims that “Yeti Town is a virtual duplicate of the Triple Town game,” and the lawsuit alleges copyright infringement. Lessons for business?

• Ensure that you have a well-drafted non-disclosure agreement (NDA) covering your negotiations. This agreement can address issues of confidentiality, and it may be appropriate to also deal with non-use, non-competition and non-solicitation issues. Not all NDAs are created equal!
• Be aware that “ideas” alone are very difficult to protect. While copyright protection exists for the software code, the basic concept may not be protectable by copyright (see this App Law Round-Up for an example). That’s where the NDA comes in, since it imposes contractual obligations to maintain the confidentiality of trade secrets, even where there may be no copyright protection for the concepts.  
• Exceptions that are commonly built into NDAs may provide an “out” for your competitor. In any event, even the best NDA cannot prevent a determined competitor from poaching your concept – the question then is whether the competitor’s conduct runs afoul of the law of copyright (as is alleged in the Spry Fox case), or constitutes a breach of the terms of the NDA, or both.

Related Reading: Someone Stole Your Brilliant Business Idea?

Calgary – 07:00 MST

 

 

iBooks Author is Mac app  allowing users to develop and publish multitouch digital books. If you author a digital book, you can then submit it to the iBookstore for purchase or free download, or distribute it through iTunes U, or use it with the iPad. It’s being touted as a way to bring digital publishing to the masses – for example, textbooks with embedded videos, audio and rotatable 3-D models that students can pinch and zoom.

Sounds great, but do you own what you create? Let’s have a look at the EULA (End User License Agreement v. 1.0.1).

According to the terms of the EULA (section 2(b)), you own the rights to the content that you create, and you can distribute that content any way you want, as long as it doesn’t include any files in the .ibooks format. (Making files in the .ibooks file format is the whole point of using this app.) If it does include .ibook files, then you can distribute the book by any means as long as you are giving it away for free. If you want to distribute your digital book for a fee, then it must be sold through Apple’s iBookstore, with Apple taking its customary 30% cut.

This does not mean (as some blog posts have suggested) that Apple takes any ownership of the content you have authored. You continue to own that content. The license terms mean that, by agreeing to use their software, templates and publishing tools (and in particular, the .ibooks file format), you agree to sell your iBooks book through Apple’s retail channel.

This isn’t really all that different from an author’s agreement with a traditional publisher, since a publisher will typically insist on exclusivity in handling final editing, packaging, marketing and sales of a book. They take a cut and share the royalties with the author. The author, who remains the copyright owner, is not free to then sell the book through a different distribution channel. They must sell through their publisher.
Calgary – 07:00 MST

 

 

Join us on March 1, 2012, (see our Events page) for the upcoming meeting of the Licensing Executives Society (LES) on The Alberta Innovation System. Technology commercialization has its challenges. However, resources and funding programs are available to support technology development for small and medium sized enterprises (SMEs) in Alberta. Within Alberta, the “innovation system” has undergone reorganization over the past 2 years. In Calgary, Calgary Technologies Inc., (CTI), and University Technologies International, (UTI) have amalgamated to form Innovate Calgary. Across the province, Alberta Ingenuity, Alberta Research Council, iCORE and nanoAlberta have merged into Alberta Innovates – Technology Futures (AITF).

How does this impact licensing professionals, counsel, advisors, SMEs and entrepreneurs? What do you need to know about commercialization support within Alberta? Attend the LES Alberta Innovation System luncheon with our panel: Darren Massey Senior VP, Innovate Calgary, David Reese, Vice President, Licensing, Innovate Calgary and Scott Bass, Alberta Innovates – Technology Futures.  

Calgary 07:00 MST   

 

Simple inventions can transform our lives. Consider this: Can we use light bulbs to transmit data wirelessly?

On TEDTalks, an inventor shows how light from a standard LED bulb can transmit data to a mobile device, in effect acting like a wireless router. When you think about it, the invention is not that revolutionary, since WiFi transmissions use standard radio frequencies, which are simply a different set of frequencies than visible light, both of which are part of the spectrum of electromagnetic radiation. This patent  (OPTICAL FREE SPACE DATA TRANSMISSION US 2011/0069958, by the same inventor, Harald Haas) discloses the use of infrared light (another frequency along the same spectrum) for wireless data transmission in an airplane, describing an invention that would enable safe inflight wireless internet. Somebody tell Alec Balwin to invest.

The use of visible light for data transmission is not new. The first use (also claimed to be the first wireless transmission) was sent by (Canadian inventor) Alexander Graham Bell in Washington D.C. in the year 1880. His patented system was called the Photophone.

Calgary – 07:00 MST

 

What? Wikipedia is off-line? Please cue the other three horsemen of the apocalypse.

It’s amazing what happens when Wikipedia decides to blackout its service to protest “legislation that could fatally damage the free and open Internet…” Suddenly everyone is talking about SOPA (our November post is here) proposed U.S. intellectual property legislation that has raised concerns across the business world. Google, Twitter, Tumblr, Reddit, Mozilla and other internet companies are also in on the protest. That’s remarkable, mainly because these companies all have their own agendas (as any business does) and there are very few circumstances where they will coordinate their protest on a single issue on a specific day. Over to you, U.S. Congress.

Related Reading from slaw.ca: SOPA: What’s All the Fuss About? 

Calgary – 11:30 MST

 

Who owns the IP rights to a Twitter account?  We associate such accounts with social media tools such as Facebook, which are deeply personal in nature. But is it really any different from any online account that you would use in the course of employment, such as a workplace subscription to a data library, or a collaboration tool such as Salesforce.com? An employer based in South Carolina puts their ex-employee’s Twitter account into this category, (Link to Article) claiming that when he left the job, the employee should have left behind the login, the Twitter account, and the account’s 17,000 followers.  In its lawsuit against the former employee (Update: Phonedog v. Kravitz – Amended Complaint), Phonedog has valued the account at $340,000 ($2.50 per follower per month).  

In Eagle v. Morgan the defendant employer claims that a former employee misappropriated (among other things) a LinkedIn account and its connections.

The law is not clear in this interesting area, which overlaps with IP law, employment law, and the law of trade secrets. One of the problems with a trade secrets claim is that Twitter followers and LinkedIn connections are not secret, and it’s questionable whether competitors could derive any value from knowing the information even if it was secret. Followers and connections are just that, they aren’t paying customers. US litigation should provide some clarity on these issues as this emerges more regularly. To date, there do not appear to be any Canadian cases that consider this point.

Related Reading: Who Owns Social Media Contacts: Employers or Employees?

Calgary – 07:00 MST

 

Today we begin a 5-part series on intellectual property that is at the edge in one way or another – either a novel technology, or a familiar “asset” that is being protected in new ways, through patent law, copyright or trade-marks. We start with gestures.

Characters in movies such as Avatar, Minority Report, Ironman and The Matrix all used hand gestures to manipulate computers. Not all that futuristic anymore, at least not for anyone who has used a Wii or Kinect to play games.

Apple and Microsoft are among the innovators who are rushing to the patent office to protect the use of hand gestures in conjunction with computer hardware devices and software to perform certain functions such as, in the case of Apple’s patent application (PDF), for real-time video processing. Microsoft’s application covers the use of hand gestures to “draw” three-dimensional objects on a computer. Before you get worried that Bill Gates can stop you from gesturing your hands in the air, there are a few points to make: these applications first have to pass through the patent office, to verify their patentability. Second, a patent would only protect an invention which uses gestures in conjunction with specific software and hardware to perform the functions covered in the patent’s claims.

If issued, these patents could provide valuable ammunition in future patent battles involving the use of gestures in conjunction with mobile devices.

Calgary – 07:00 MST