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US companies seeking to enforce intellectual property rights against Canadians face certain challenges. First, a US company would commence a lawsuit in a US court, and must serve the Canadian person or entity in Canada. A US plaintiff would serve a Canadian under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (known as the “Hague Convention”). Under this Convention, there is a Central Authority designated federally and for each province and territory. In Alberta, this is done through Alberta Justice, Office of the Sheriff (Civil Enforcement) in Edmonton or Calgary. The normal procedure for service in Canada is personal service, and in Alberta this is through a “process server”. Once served, the Canadian then has to decide whether to respond to the US lawsuit.

In some case, the Canadian decides to ignore the US lawsuit. This happened in Blizzard v. Simpson, 2012 ONSC 4312 (CanLII), where Blizzard Entertainment sued Michael Simpson, a developer who was alleged to have authored and sold a “maphack” for Blizzard’s popular multiplayer game known as StarCraft II – Wings of Liberty. Mr. Simpson was served in Canada but failed to file any defence to the California lawsuit. As a result, Blizzard took default judgement in which Mr. Simpson was ordered to pay statutory damages of $150,000 legal fees and costs of $45,000. A permanent injunction was also ordered to prevent further infringement of Blizzard’s StarCraft II copyright or violation of the StarCraft II End User License Agreement (“EULA”) and Battle.net terms of use (“TOU”), among other things.

Blizzard then came to Canada to enforce their US judgement against Mr. Simpson. This required a second lawsuit (in Ontario, where Mr. Simpson resided). A Canadian court assesses the jurisdiction of the original court (by applying Canadian conflict of laws rules), and verifies that there are no defences of fraud, breach of natural justice, or public policy, which would cause the Canadian court to refuse to enforce the US judgement.

In this case, Mr. Simpson elected to defend the lawsuit in Canada. But by that time it was too late, since the court was not considering the merits of the copyright infringement case, but rather was reviewing the enforcement of a foreign judgement that had already been granted. Mr. Simpson attempted a novel defence by alleging that it was Blizzard who breached the terms of Mr. Simpson’s own website (terms that prohibited access by employees or lawyers of Blizzard). The court found this argument “untenable”, and concluded by entering the California judgement as a judgement of the Ontario court.

It is worth noting that defences to the copyright infringement claim may have been available in the California lawsuit - it is clear in both Canadian and US law that a breach of the terms of use does not (by itself) infringe copyright. It is not clear whether any copyright infringement actually occurred, but Blizzard won that argument by default.

Related Reading: Apps, Bots and Workarounds

Lessons for Canadian business: don’t ignore US lawsuits!

Calgary – 07:00 MST

The case of Leuthold v. Canadian Broadcasting Corporation , 2012 FC 748 (CanLII) illustrates several common licensing pitfalls.

In this case, a photojournalist who was on the scene in New York City on September 11, 2001, licensed a number of still photographs to the CBC for use in a documentary about the 9/11 attacks.  The photos were included in 2 versions of the documentary, and the documentary was aired a number of times betwen 2002 and 2004. The question was whether all of the broadcasts were within the scope of the licenses granted by Leuthold as the copyright owner. More than one license was granted through various emails, faxes and license agreements between the parties.

Taking this case as a cautionary tale, here some of the common pitfalls to watch for:

• The specific works must be identified – which specific photos or copyright-protected works are included in the license?
• Who are the licensees? – in this case network affliliates did broadcast the works, and CBC was liable for the infringing broadcasts of these regional affiliates or stations.
• The scope of a broadcast license should be clear on whether the rights include one or more broadcasts, in one or more time-zones, and by one or more affiliates. In this case, there was considerable debate about whether CBC Newsworld was included in the license. The court decided that it was included, by looking at the surrounding circumstances, though the terms of the license were not entirely clear.
• The scope of any license should be clear on whether the license is exclusive or non-exclusive.
• Consider whether the license should state the geographic or territorial scope. In this case, the license referred to Canadian broadcast rights, but CBC Newsworld international also broadcasts into the US and internationally.
• Consider the impact of follow-up emails and correspondence which might be used as a de facto license, or to interpret the meaning of the license.

Ultimately, the court found that the CBC had infringed copyright in the photographs in six broadcasts which were not covered by the licenses. Damages of US$19,000 were awarded.

For copyright licenses, get advice from the Field Law Intellectual Property & Technology Group.

Calgary – 07:00 MST

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In June, the Copyright Modernization Act was passed by Parliament. However, it did not have the force of law yet (See: Copyright Bill Becomes Law). Today, portions of the new copyright law came into force (See: this link). This phased approach is somewhat confusing. The provisions relating to format-shifting, time-shifting, satire, parody – essentially all the provisions directed at education and consumers – are in force.

Those sections dealing with ISPs and the notice-and-notice procedures (subsection 47 [41.25, 41.26, and 41.27(3)]), will be determined through a separate order-in-council process once the regulations are finalized. The provisions which implement certain WIPO treaties (World Intellectual Property Organization Copyright Treaty (WCT) and the World Intellectual Property Organization Performances and Phonograms Treaty (WPPT) are held back, and will come into effect when the treaties are ratified.

I will be speaking tomorrow to the Canadian Bar Association, Technology & IP Subsection, on the subject of copyright updates, and will be reviewing these provisions.

Calgary – 21:00 MST

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Copying and selling counterfeit software can be a risky proposition if Microsoft, Adobe and Rosetta Stone team up against you.

A Toronto man sold pirated software on Kijiji and Craigslist and three software vendors combined forces to sue him for copyright infringement by way of summary judgment, a truncated procedure that avoids the need for a full trial. Last month, the Canadian Federal Court found that the man’s conduct was “on the negative side” of “outrageous” and “highly unreasonable”. This conduct added $105,000 to the overall damage award of $445,000 for copyright infringement, made up of statutory damages, punitive damages, costs, plus pre- and post-judgment interest. A few interesting points about this decision:

1. Statutory damages under the Copyright Act range from $500 to $20,000. Here, the judge awarded maximum statutory damages of $20,000 per infringed work.
2. The court reviewed when punitive damages are appropriate: “when a party’s conduct has been malicious, oppressive and high-handed, offends the court’s sense of decency, and represents a marked departure from ordinary standards of decent behaviour”. In this case, the court was convinced that a significant punitive damage award was warranted.

The case is: Adobe Systems Inc. et al v. Dale Thompson dba Appletree Solutions 2012 FC 1219.

Calgary – 07:00 MDT

The Medium is a publication discussing current intellectual property and technology issues. This edition includes: Apple vs. Samsung: Intellectual Property Injunctions as a Strategic Tool, as well as “New Copyright Act (The Top 10 List)“.

Calgary – 07:00 MDT

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When is an idea protectable? This question is front-and-centre for many entrepreneurs. When can they discuss their business idea, invention, or brilliant screenplay?

This story relates to the protectability of ideas under the law of copyright. Basically, there is no protection under copyright law for an idea itself, only the particular form and expression of that idea. This was illustrated last week in Elijah Schkeiban v. James Cameron et al (Case No. 2:12-cv-00636, California Central District Court), where the plaintiff claimed that Mr. Cameron’s blockbuster Avatar film infringed copyright in Elijah Schkeiban’s screenplay entitled “Bats and Butterflies”.  In this case, the plaintiff alleged that certain character traits and plot elements were copied by Cameron. These broad elements of a story – good guys vs. bad guys, or flawed protagonists – are precisely the things that are not protectable. The case was dismissed.

It is important to note that courts will review elements of expression such as plot, themes, dialogue, mood, settings and characters, to determine if infringement occurs.

Compare this to earlier decisions that we reviewed here: (Copyright: Apps and APIs; Tetris Holding LLC v. Xio Interactive, Inc.) in which the court decided that the look-alike game Mino did infringe the protectable “look and feel” of Tetris; also see Dath v. Sony Computer Entertainment America Inc., where the US Ninth Circuit Court of Appeals upheld the lower-court decision in a copyright infringement case involving the Sony PS2 and PSP title “God of War”. The plaintiffs alleged that Sony infringed copyright in their written works about war between Sparta and Athens. No infringement was found in that case. (Reviewed in App Law Round-Up.)

Want to know who James Cameron really copied? Go see Fern Gully.

Calgary – 07:00

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In a Facebook app called “SuperPoke! Pets”, players adopted virtual pets and acquired or purchased virtual currency to buy things for their virtual pets. As one of the first Facebook apps, the game took off in popularity after its launch in 2008. The game was acquired by Google in 2010, but was eventually discontinued at the end of 2011, leaving users without access to their accumulated virtual pets, currency and pet accessories. Users attempted a class-action suit against Google for “elimination of users’ money, goods and property.”

Google defended the class action by citing the dispute resolution clause, which compelled arbitration. In Abreu v. Slide, Inc., 12 0042 WHA (N.D. Cal.; July 12, 2012), the court confirmed that for an arbitration clause to be unenforceable, it must be both “procedurally” and “substantively” unconscionable. Essentially this means that an unenforceable clause would be oppressive due to unequal bargaining power between the parties, or would lead to “overly harsh or one-sided results.” As the court phrased it, the clause must be so one-sided as to “shock the conscience.”

In this case, the clause was upheld, and the dispute was sent to arbitration to be resolved.

Lessons for business?

• When drafting online terms, ensure you get advice on the dispute resolution options.
• An app developer or game publisher may be tempted to stack the “Terms of Use” in their favour, but these terms must be balanced. The inclusion of harsh or shocking terms in the fine-print may put the entire agreement at risk of being declared invalid and unenforceable by the courts.

Calgary – 07:00 MDT

For those who missed it, check out this excellent article by my colleague Tom O’Reilly: $5 Cab Ride – SCC Copyright Decisions Don’t Take Us Very Far providing some balanced commentary on the recent Supreme Court of Canada copyright decisions.

Calgary – 07:00 MDT

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Bookmark ipblog.ca on your iPhone, iPad, Android tablet or mobile device for updates and developments in Canadian intellectual property law, including practical information and commentary on intellectual property business issues, technology commercialization and developments in the law, copyright and patent questions, trade-mark law, software and IT outsourcing, and related areas including privacy and cleantech licensing.

ipblog has been published since 2006.  In 2009, we added applaw.ca to our site, covering legal developments in the growing mobile application industry.

We have surpassed 1 million page-views from readers around the world. It’s hard to compete against YouTube cats… but we try.

Thanks to all of our readers. We’ll be taking a break during the month of August, and will resume in September, 2012.

Calgary – 07:00 MDT

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In October, I will be presenting at the 5th Cloud Computing Law Conference in Calgary, Alberta (October 9 and 10, 2012). Check out the brochure for a full description, including the topic “ALLOCATING IP RISKS IN THE CLOUD”: Service providers often seek to impose standard form contracts for the provision of cloud computing services containing standards of services that are often on an “as-is” basis. This session will explore the process of negotiating warranties, indemnification and limitation of liability clauses to satisfactorily allocate risks, including: scope of warranties; service vs. product warranties; remedies available for breach of warranties; and scope of customary indemnification obligations.

Readers of ipblog.ca are eligible for a 15% discount (Email me for the registration discount code).

Relating Reading: ipblog’s Cloud Computing library of articles, including “The Cloud: What goes up must come down” and “Online Agreements: Click-Through Upheld“.

Calgary – 07:00 MDT

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Apps are not just for Angry Birds anymore. The licensing of mobile apps is becoming more common for business-to-business software vendors who are extending the reach of their enterprise applications to take advantage of opportunities in mobile and cloud computing. If you are a vendor of enterprise software and you want to add mobile functionality, here are a few of the most important legal issues to consider:

1. Check the EULA:

Compared to the full suite of desktop functionality, the mobile app may represent a small piece of your overall software product. But even a mobile app needs an end-user license agreement (EULA). Cloud computing service providers may have service terms that are designed for web access to their software, and they may not perceive the need for a “traditional” EULA, but in the case of a mobile app, remember that this is a “traditional” license where a copy of the application resides on the user’s device and system. So point number 1 is to check the EULA.

Software vendors should understand that apps launched on the iOS platform will come with a “ready-made” EULA courtesy of Apple. Other platforms will come with other license terms. Software vendors should consider developing a custom EULA if there are good reasons for doing so after a risk assessment. A few other points to note: If you prepare your own EULA on the iOS platform, take note of Apple’s “mandatory terms” that must be included in every license. Under the Android Market Developer Distribution Agreement, the default terms grant a “non-exclusive, worldwide, and perpetual license”. If you don’t want to grant such a broad license, then consider a custom-made EULA.

2. Review Privacy:

App developers should get legal advice on privacy issues. The privacy problem with apps has been percolating for some time and several high-profile reports have brought attention to this issue. In several cases, app developers have (intentionally or otherwise) harvested private details about app users by dipping into address books and location-data. In Canada, the privacy landscape is complex, but is underpinned by private-sector privacy laws that apply to “personal information” across all industries, at both the federal and provincial level.

In the US, the California Attorney General recently 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. If you don’t have a privacy policy, then consider developing one along with the launch of your mobile app. It can be a useful exercise to determine what information is being collected, from whom, for what purpose.

3. Check the Data:

Ownership and control of data is a critical issue for end-users. In the case of mobile apps that are an add-on for broader enterprise or cloud-based software offerings, the data issue is even more complicated. Who owns it? Who is responsible for it? Where does the data reside? On the device, on customer’s server, on the vendor’s server, or with a third-party host in the cloud? These issues can be addressed within the app EULA, or it may be possible to cover them within the EULA for the enterprise software application. Data escrow may also be appropriate in some cases.

4. Distribution:

Consider where and how the mobile app will be distributed? For example, in some cases, mobile apps can be contained within a “closed” system, which permits distribution within a company. However, if you are a vendor wishing to distribute your mobile app to all of your customers, the easiest method of distribution may be, for example, through Apple’s App Store. This means the app will be available to users in over 60 jurisdictions around the world. Consider the jurisdictional issues – for example, one app developer realized that its marketing materials offended advertising rules of the Federal Trade Commission in the United States, which triggered an FTC complaint and ultimately a fine.

5. Integration:

It goes without saying that your mobile app should be integrated with the other services or software products (whether these are desktop, virtualised or web-based services). But consider this both from a technical perspective as well as a legal perspective. Does the app EULA dovetail with the EULA for your enterprise software applications? What promises, warranties or limitations are available under each document? Does one agreement pick “Alberta law” while the other one falls under “California law”? Consider the situation where the enterprise EULA makes promises or guarantees that user-generated data will be archived by the licensor and provided in a particular format to the customer on request. If that data is collected through the mobile app, and resides on devices of users, then this promise may be difficult or impossible to perform.

6. Brands and Trade-marks:

Lastly, the marketing of mobile apps deserves particular attention. You may have secured trade-mark rights for your enterprise software, but you should also consider trade-mark rights for the app itself. Apple’s App Store is still something of a wild-west when it comes to trade-mark rights. Consider treating the mobile app just like you would any other product – branding and brand protection should be considered in the most important jurisdictions where your customers will be downloading and using the app.

This article was initially published on Corporate LiveWire.

Calgary – 07:00 MDT

For copyright fans, today kicks off a frenzy of reading Supreme Court decisions. Judgments in the 5 copyright cases which were heard last December were released today:

1. ESAC v. SOCAN
2. Rogers v. SOCAN
3. SOCAN v. Bell
4. Alberta v. Access Copyright
5. Re:Sound

IPOsgoode’s exellent summary appears here. Michael Geist’s review appears here. Further coverage to follow.

Calgary – 07:00 MDT

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Bill C-11, the long-awaited and long-debated Copyright Modernization Act has received Royal Assent… but is not yet in force. For an overview of the Act, see the government’s legislative summary.

Calgary – 11:00 MDT

It is a fundamental feature of copyright law that it protects only original expression, not ideas. Applied to software, the law of copyright tells us that certain elements of a computer program are not protectable by copyright. For example, purely functional elements such as the structure of a library, or database, or elements dictated by the operating system, can fall outside the scope of copyright protection, since those elements lack the originality necessary for copyright.

In Tetris Holding LLC v. Xio Interactive, Inc., an app developer was found to have infringed copyright in the famous Tetris game.  The puzzle game Mino was, by the defendant’s own admission, inspired by Tetris. However, the defendant maintained that it only copied unprotected elements, a conclusion that the developer reached after researching copyright law. The court did not agree. After an exhaustive review of the idea-expression dichotomy (40-pages worth of anaylsis, if you want to read more), the court decided that Mino did infringe the protectable “look and feel” of Tetris. According to this case, you shouldn’t assume that expression is unprotectible merely because it is related to a game rule or game function.

UPDATE: In the Oracle v Google case (see our earlier coverage here), the judge decided that APIs in this case were not eligible for copyright protection. This amounts to a complete loss for Oracle in its suit against Google for infringement of the Java APIs used in Google’s Android software. This case is expected to go up to appeal.

Calgary – 07:00 MDT

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The House of Commons has now passed Bill C-11, An Act to Amend the Copyright Act, with only minor amendments at the committee stage. The Bill has been sent up to the Senate where it has passed First Reading. Second Reading could commence as soon as today.

After years of ponderous debate, this quick pace suggests the Bill will progress through the Senate efficiently. However, the Senate rises for the summer at the end of June, leaving little more than a week to push the legislation through. If the Bill does not become law by the end of June, then it will be pushed into the fall calendar. The Senate returns from the summer recess on September 17th … (wish we were all so lucky).

Stay tuned.

Calgary – 2:00 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

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Join the Field Law IP & Technology Group for a breakfast seminar on June 6, 2012, in Nisku, Alberta, on the following subjects:

• patents for oilfield service companies;
• intellectual property issues;
• non-disclosure and confidential information in the oil patch;
• copyright and trade-marks, brand protection.

Registration details: RSVP to rsvpEdmonton@fieldlaw.com or (403) 260-8502.

Calgary – 10:30 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 

 

My article on “Intellectual Property Issues in Corporate-Commercial Transactions” is published in the Field Law newsletter The Medium.

Calgary – 07:00 MDT