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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

Our earlier post (Domain Name is “Personal Property”) related to the decision in Tucows.Com Co. v. Lojas Renner S.A., 2011 ONCA 548, where an Ontario court had to decide if the domain name renner.com was intangible personal property “located in Ontario”. This was an important issue in the case, since a finding that the domain name was property located in Ontario would permit the court to take jurisdiction and the lawsuit to proceed. The court decided that there is an emerging consensus among other courts that domain names are a form of property, and found that domain names, for the purposes of Ontario law, can be considered intangible personal property. This case was denied leave to appeal to the Supreme Court of Canada in Lojas Renner S.A. v. Tucows.Com Co., 2012 CanLII 28261 (SCC).

Calgary – 07:00

We have reviewed a few decisions relating to arbitration clauses in intellectual property license agreements (see here ). Courts in the US have shown that they are willing to uphold arbitrator’s decisions. What is the law in Alberta?

The court in TheraVitae Ltd. v. Kwalata Trading Limited, 2011 ABQB 626 (CanLII) dealt with alleged breaches of stem cell therapy licencing agreements.  The licensing agreements contained arbitration clauses and a dispute arose between the parties, which was referred to arbitration.

Under the Arbitration Act (Alberta), a party must demonstrate that they are entitled to appeal an arbitrator’s decision. If the arbitration agreement includes the right of appeal to court, then either party can appeal the arbitrator’s decision on a question of law, on a question of fact or on a question of mixed law and fact. If the arbitration agreement is silent on the topic of appeal, then Section 44(2) of the Act allows for appeals on questions of law, provided certain criteria are met. Those criteria are:

1. the importance to the parties of the matters at stake in the arbitration justifies an appeal, and
2. whether the determination of the question of law at issue will significantly affect the rights of the parties.

In those two situations, a court may review the arbitrator’s decision. However, Section 44(3) prohibits a court from granting leave where the question being appealed was specifically referred to the arbitral tribunal for decision. In other words, where the arbitrator was asked to rule on a particular question of law, the decision of the arbitrator will not be reviewed by the court. In the TheraVitae decision, the court decided that the question was specifically referred to the arbitrator, so the decision was not reviewable by the court.

Lessons for business?

• Arbitrator’s decisions will be given deference, so if you want to refer your disputes to binding arbitration, be aware that there may be no right of appeal to the courts if you are not happy with that decision.
• Arbitration clauses and agreements must be reviewed carefully to ensure that the parties are aware of the scope of the arbitrator’s authority, and the rights of appeal that may be available.

Calgary – 07:00 MDT

Many intellectual property license agreements refer disputes to arbitration under an arbitration clause. After the arbitrator renders a decision, can that decision be appealed to court? Or is it final and binding on the parties?

This issue was addressed in Affymax, Inc. v. Ortho-McNeil-Janssen Pharmaceuticals, Inc.  , 660 F.3d 281, 285 (7th Cir. 2011) a decision of the Seventh Circuit Court of Appeals in the US. In that case, the court dealt with an appeal from an arbitrator’s decision under a license agreement. The court was clear that it had no interest in vacating or overturning the arbitrator’s award, unless the award is reviewable under one of the 4 circumstances in Section 10 of the Federal Arbitration Act (US):

1. if the award was procured by “corruption, fraud, or undue means”;
2. in the case of “partiality or corruption in the arbitrators”;
3. where the arbitrators were “guilty of misconduct” or misbehavior by which the rights of any party have been prejudiced; or
4. where the arbitrators exceeded the scope of their powers, or so imperfectly executed them that “a mutual, final, and definite award upon the subject matter submitted was not made.”

According to this decision, if it doesn’t fall into one of these 4 categories, then the court will not interfere with the arbitrator’s decision.

Other appeal-level courts in the US are split on this issue, and some have reviewed arbitration decisions based on an independent category, known as “manifest disregard of the law.” Since that is not a specified ground for appeal in Section 10, it was not accepted by the Seventh Circuit in the Affymax decision. The lessons for business? In the US, arbitrator’s decisions will not be subject to review by the courts unless the review falls into one of these 4 narrow grounds.

What about the law in Alberta? Watch for Part 3.

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

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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

This 2010 case is a good reminder that courts will give effect to arbitration clauses if that’s what the parties have chosen in their license agreements.

• In PRM Energy Sys., Inc. v. Primenergy, LLC, 592 F.3d 830 (8th Cir. 2010) , the United States Court of Appeals, Eighth Circuit decided to uphold an arbitration clause in a patent license agreement, which was drafted to cover “all disputes arising under” the agreement. A complex series of agreements and disputes led PRM to sue Kobe Steel, a non-party or “non-signatory” to the original license agreement that contained the arbitration clause. However, Kobe Steel convined the court that the arbitration clause should be enforced. The court decided that PRM’s claims were so intertwined with patent license that contained the arbitration clause that it would be unfair to allow PRM to rely on the license agreement in making its claims, but to avoid the arbitration clause of that same agreement.

In Canada, courts have also shown that they are prepared to uphold arbitration clauses. Consider this case:

• The case of University of Toronto v. John N. Harbinson Ltd. 2005 CanLII 47089 (ON SC), dealt with a broad arbitration clause that said: “Any dispute, controversy or claim arising from this Agreement or its breach, termination or alleged invalidity shall be settled by arbitration in accordance with the Arbitrations Act of Ontario, as amended.” In this case, the court decided that the arbitration clause should be upheld, particularly since no Patent Act claims or remedies were being sought.

Related reading: See Did You Say Arbitration in Kazakhstan?, reviewing a case where arbitration was triggered by one of the parties, and the Alberta Court decided that the breach of contract questions fell within the scope of the arbitration under the law of Kazakhstan.

Calgary – 07:00 MDT

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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

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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

 

You may recall our earlier posts describing the gTLD process (see: The New gTLDs: Who, What and When). 

ICANN‘s process introduces new generic Top-Level-Domains (or gTLDs), expanding the domain name system from the current familar strings such as .com, .net and .ca, etc. to who knows what… .flowers, .lawyers or .anything. The application period was due to close on April 12, 2012. May 1, 2012 was slated as “Reveal Day”, when the applicants and their proposed TLDs were to be published. So far, some 2,091 applications along with USD$350 million in application fees have been submitted to ICANN. The May 1st deadline has passed without the publication of the application information, because ICANN has suffered a “software glitch” which must be resolved before the application period can be reopened and finalized.  

Once that is complete, ICANN will publish the names of applicants and their proposed TLDs. This triggers a seven-month objection period, during which rightsholders can file a complaint. A recent article from Managing Intellectual Property reports that the “Trademark Clearinghouse” is also behind schedule.

Even if half of the applications are approved, that means the introduction of a thousand new generic Top-Level-Domains. Trade-mark owners, brace yourselves.

Related reading: Lawyers Weekly: Domain Name Article

Calgary – 07:00 MDT

 

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

For intellectual property lawyers, sting operations against counterfeiters of luxury handbags is what dreams are made of. An undercover sting - complete with a clandestine meeting at a Toronto gas station, undercover agents and hidden cameras – resulted in a trade-mark infringement award against a reseller of copycat merchandise such as Gucci handbags, Louis Vuitton and Hugo Boss items. In Guccio Gucci S.p.A. v. Mazzei, 2012 FC 404 (CanLII)  the counterfeiter was slapped with an $85,000 damage award. 

This was based on the rough math of infringement in Canada: damages of $3,625 per infringement against flea market vendors and “itinerant sellers”; $7,250 where the infringer is operating from a “fixed retail establishment”; and $24,000 against importers, distributors and manufacturers.

 

Calgary – 07:00 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

 

Yes, only lawyers ask such questions. But now that the question has been asked…. A recent lawsuit has framed this question in copyright terms. In Canada Post Corporation v. Geolytica Inc. c.o.b. Geocoder.ca (Federal Court, No. T-519-12), Canada Post has sued Geocoder for breach of copyright in postal codes. According to the Statement of Claim, a compilation of Canadian postal codes within a database is the property of Canada Post, and a production or reproduction of that database constitutes an infringement of the copyright held by Canada Post. Geocoder, for its part, has responded by claiming in its Statement of Defence that its “Canadian Postal Code Geocoded Dataset” was independently authored through a “crowdsourcing” effort over several years. “Geolytica created this database without ever accessing or copying any database of postal codes of the Canada Post Corporation.” 

The first question is whether postal codes are even eligible for copyright protection? Second, if they are protectable by copyright, but no direct copying occurred, can there be an infringement? What about indirect copying? Perhaps the closest case on record is Ital-Press Ltd. v. Sicoli, 1999 CanLII 8048 (FC), where the court considered telephone listings and indicated the following: telephone listings that are “…garden-variety white pages director[ies], devoid of even the slightest trace of creativity” cannot be eligible for copyright protection (citing the famous US case of Feist Publications, Inc. v. Rural Telephone Service Co., Inc…. famous for copyright lawyers that is).

The wider issue is one we’ve seen many times over the history of copyright: a traditional business or institution feels threatened by smaller start-ups who innovate to reproduce or replace an established business model. We will monitor developments in this fascinating case.

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