Self-replicating technologies present intellectual property law with some unique challenges.

In the case of Bowman v. Monsanto Company (May 13, 2013), the US Supreme Court has weighed into this thorny field, and on Monday it delivered a unanimous judgment upholding the rights in Monsanto’s patented soybeans. (See our earlier post: Self-Replicating Technologies (Patents in the Field, Part 2).)

Monsanto sells its patented seeds under a license agreement. Farmers are permitted to plant the beans in one, and only one, growing season. Collection and replanting is prohibited under the terms of the license. Bowman bought seeds from a local grain elevantor, planted, harvested, collected and replanted those seeds in successive years. In this way, he was able to take advantage of the “Round-Up Ready” qualities of the genetically modified beans, without paying the usual fee that would be owed to Monsanto as the patent owner. In the court’s view, this deprived Monsanto of the reward that patent law provides for the sale of each patented article. The court was clear that “Patent exhaustion provides no haven for that conduct.”

According to the court: “…we think that blame-the-bean defense tough to credit. Bowman was not a passive observer of his soybeans’ multiplication; or put another way,the seeds he purchased (miraculous though they might be in other respects) did not spontaneously create eight successive soybean crops. …Bowman devised and executed a novel way to harvest crops from Roundup Ready seeds without paying the usual premium. He purchased beans from a grain elevator anticipating that many would be Roundup Ready, applied a glyphosate-based herbicide in a way that culled any plants without the patented trait, and saved beans from the rest for the next season.”

The US Supreme Court sided with Monsanto and upheld the Federal Circuit Court of Appeals decision.

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Field Law is proud to host the Spring 2013 meeting of the Calgary Chapter of the Licensing Executives Society on May 16, 2013 on the topic of licensing negotiations between members of Canada’s Oil Sands Innovation Alliance (COSIA).

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Are APIs protected by copyright?

In the long-running litigation (and hey, is there any litigation that isn’t “long-running”?) between Oracle and Google, a US court decided in 2012 that APIs in this case were not eligible for copyright protection. See our earlier post. This meant a complete loss for Oracle in its lawsuit against Google for infringement of the Java APIs used in Google’s Android software.

Copyright protects only original expression. Applied to software code (including API protocols), the law of copyright tells us that certain elements are not protectable by copyright since they lack originality. The US trial level decision in Oracle vs. Google has been appealed and the parties are now filing briefs in the US Federal Court of Appeals (a copy of Oracle’s brief is here). The briefs make fascinating reading for those interested in the finer points of copyright law and the history of the Java programming.

Oracle’s brief opens by sketching a scene: “Ann Droid wants to publish a bestseller. So she sits down with an advance copy of Harry Potter and the Order of the Phoenix  —the fifth book—and proceeds to transcribe. She verbatim copies all the chapter titles—from Chapter 1 (“Dudley Demented”) to Chapter 38 (“The Second War Begins”). She copies verbatim the topic sentences of each paragraph, starting from the first (highly descriptive) one and continuing, in order, to the last, simple one (“Harry nodded.”). She then paraphrases the rest of each paragraph. She rushes the competing version to press before the original under the title: Ann Droid’s Harry Potter 5.0. The knockoff flies off the shelves.”

Does this constitute copyright infringement?

One of the big issues on appeal will be whether the appeals court accepts the notion that copyright infringement can occur without any actual direct copying of code. This is the so-called SSO argument – that the “structure, sequence and organization” of the software can attract copyright protection, regardless of whether specific code is cut-and-paste. As illustrated in the Harry Potter example above.

Stay tuned. This is one to watch in 2013.

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Photo credit: Google, Inc.

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Here is the next case that illustrates the potential pitfalls when dealing with social media:

This recent US copyright decision involving Agence France Presse (AFP) and photographer Daniel Morel dealt with the rights of a news publisher to publish images posted to Twitter.

Mr. Morel is a photojournalist who took a number of images of the 2010 earthquake in Haiti. He then posted those images to Twitter. Those images were picked up by AFP who “licensed” the images on to Getty Images.

When Morel complained, steps were taken to have the images removed from the AFP / Getty system. But through series of mixups (of the kind that would be familiar to anyone dealing with information technology and complex organizations such as AFP and Getty Images), the pictures were not removed and were picked up and published by The Washington Post under their agreement with AFP/Getty.

The court ultimately had to decide whether Mr. Morel – the photographer – had granted a kind of license to AFP by posting his images to Twitter. This required an analysis of the Twitter Terms of Service. The court decided no, the Twitter Terms of Service do not grant such a license. The court stated that “even if some re-uses of content posted on Twitter may be permissible, this does not necessarily require a general license to use this content as AFP has.” Put another way, a copyright owner who posts content to Twitter is clearly giving up some rights to that content – the right, for example, to re-tweet, which is a fundamental part of Twitter and is contemplated (even encouraged) by Twitter’s Terms of Service. However, merely by posting to Twitter, that copyright owner is not giving others an unrestrained right or license to remove the content, copy it and redistribute it commercially.

The court says “…the Twitter TOS were not intended to confer a benefit on the world-at-large to remove content from Twitter and commercially distribute it…” This is an important reminder.

In the final analysis (and that is 58 pages of analysis if you want to read the judgement) AFP and The Washington Post were liable for copyright infringement for use of Morel’s images.

Lessons for business:

• This case confirms that any re-use of content from Twitter – and by extension, other social media streams – should be handled carefully.
• Re-tweets are clearly contemplated as being within the scope of permitted uses, but copying and republishing for commercial purposes clearly is not.
• Many situations will fall somewhere in the middle between those two ends of the spectrum. Before using or re-using content for commercial purposes, take time to review the specific situation, including the applicable social media terms of service. Before posting your own content to Twitter, be aware that the Twitter terms do contemplate certain re-uses (the scope of which is difficult to define precisely). Once it’s posted, it’s hard to stuff the genie back in the bottle

The case is Agence France Presse v. Morel.

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My article Click and Copy: Breach of Online License Agreements and Copyright Infringement was published in Canadian Intellectual Property Review in December.  The enforceability of click-through licenses for online software-based services is critical within the information technology industry. Software vendors and cloud-computing service providers require certainty that the licence terms governing these products will be enforceable.

In other words, vendors require certainty that, if there is a breach by a user, the law will provide a remedy, under the law of either contract or copyright, or both. When does a breach of a licence or breach of online terms of use constitute not only a contractual breach but also an infringement of copyright in the software?

The outcome of this question affects whether a vendor or provider would be able to access the infringement remedies under part IV of the Copyright Act, including injunction, damages, accounts, delivery up, and statutory damages. By reviewing some of the recent case law in this area, this article examines the intersection of copyright and contract law in the context of click-through software licences and online terms of use, specifically when a breach of such terms constitutes copyright infringement, giving rise to remedies under the Copyright Act, and when a breach is merely a breach, giving rise to remedies and potential damage awards under contract law.

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As mentioned in our previous post, industrial designs protect the visual features of a product (shape, configuration, pattern or ornament). Functional, utilitarian or useful elements are not eligible for protection. This was illustrated in Bodum USA, Inc. v. Trudeau Corporation, 2012 FC 1128 (CanLII), where the court found that Bodum’s double-walled drinking glass design was not infringed, since the competing product was not substantially similar in light of the many variations of double-walled glasses in the marketplace. The designs would have had to be virtually identical to support a finding of infringement.

A second interesting element to this case is the counterclaim by Trudeau Corp., who sued for a declaration that the Bodum design was invalid due to the prior art on the register. The court in Bodum confirmed that to be registrable, an industrial design must be substantially different from prior art. A simple variation is not enough. For a design to be considered original, there must be some “substantial difference” between the new design and what came before. “A slight change of outline or configuration, or an unsubstantial variation is not sufficient to enable the author to obtain registration.” In this case, the Court reviewed a number of other existing designs for double-walled glasses – one of which was designed in 1897 – and decided that Bodum’s design was not original. To come to this conclusion, the Court set aside the utilitarian functions, the materials used, and colours applied, and looked merely at the visual or ornamental features.

In the end, Bodum’s design did not satisfy the requirement of “substantial originality”, and the registration was expunged.

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Industrial designs are like the shy cousins of much sexier patents and copyright. Sure, patents and copyright get all the attention, but industrial design can be a very reliable, useful tool in the intellectual property toolbox.  This category of protection (in the US, known as “design patents”) will protect the visual features of a product (shape, configuration, pattern or ornament). Functional, utilitarian or useful elements cannot be protected. Industrial design protection expires after 10 years, so it does not extend as long as patents or copyrights, but can provide protection for articles that are not eligible for either copyright or patent protection.

In Bodum USA, Inc. v. Trudeau Corporation, 2012 FC 1128 (CanLII), the court considered two competing double-walled drinking glasses, one of which (the design owned by Bodum) was registered as an industrial design. The double-wall configuration itself serves a utilitarian function: it keeps hot drinks hot and cold drinks cold. Thus, the double-walled feature could not be assessed in the infringement analysis. As described in the judgement: “The court has to decide only whether the alleged infringement has the same shape or pattern, and must eliminate the question of the identity of function, as another design may have parts fulfilling the same functions without being an infringement. Similarly, in judging the question of infringement the court will ignore similarities or even identities between the registered design and the alleged infringement which arise from functional matters included within the design.”

According to the Court, the competing product must be characterized as “substantially the same” for there to be infringement. This question must be analyzed by the Court from the point of view of how the informed consumer would see things. In the end, the Court decided that there was no infringement between Bodum’s design and the competing product.

Related Reading:

Industrial Design in Canada & US

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Infringement! Litigation! Legislation! There is never a dull moment in the wonderful world of intellectual property law, and 2013 will be no exception. Here’s our list of what to watch in the coming year:

Copyright. If you keep making the same predictions year after year, eventually one of them will come true, right? For the last several years, we predicted that copyright reform would finally come to Canada. 2012 did not disappoint as the year of copyright, with the release of five SCC decisions and the passing of the copyright modernization legislation that had been long awaited.  We expect that 2013 will provide some opportunities to test the new law in court.

Anti-Spam. As with copyright, many have predicted that Canada’s “new” anti-spam law would come into effect for several years. Yes, Parliament passed the Fighting Internet and Wireless Spam Act and it did receive royal assent way back in December, 2010. However, Canada’s anti-spam legislation is still not in force. Industry Canada released draft revised anti-spam regulations last week, and it would be surprising if we didn’t see final regulations in the first half of 2013.

App Law. We predicted in 2011 that app law would develop as regulations and laws fight to keep pace with the explosion of the app economy which is expanding in both business and personal life, along with cloud computing. 2012 provided a number of important developments in app law, mostly in the US. 2013 should continue to provide clarity in this growing area of law.

Apple and Samsung. The litigation that brought patent infringement back into the public consciousness like no case since RIM vs NTP may be resolved in 2013. Even Judge Koh has made a plea for “global peace.”

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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!

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Any well-drafted technology or patent license agreement will contain dispute resolution provisions that may cover a number of things: such as picking a governing law in case of disputes, mandating arbitration or other alternatives to litigation, or even picking the courts or “forum” in which disputes will be heard – known as a “forum selection clause”.

Canadian licensors should take note of the recent US decision in Mitek Systems, Inc. v. U.S. Services Automobile Association, in which the forum selection clause in a technology license chose Delaware as the applicable law, and any “court of competent jurisdiction sitting in the State of Delaware” as the forum in which lawsuits must be filed. Delaware was the home jurisdiction of the licensor, though it carried on business in California, and the licensee was based in Texas.

When a dispute arose, the licensee brought a claim first, in the State of Texas. The licensor filed a second lawsuit in Delaware, claiming that was the proper forum for disputes to be heard.

See this article from the Licensing Executives Society: A Forum-Selection Clause in a License Agreement May Not Necessarily Prevent a Litigation From Being Filed and Permitted to Proceed in a Different Court for a discussion of the decision. Essentially, the court decided that other factors were more important than the forum selection clause, and the case was allowed to proceed in Texas.

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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.

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“Great Fun” is a service offered by a company called Trilegiant. Trilegiant offers certain discounts to Great Fun members based on a monthly membership fee. Problem is, some members didn’t realize they were members until they saw the membership fee on their credit card statement. In Schnabel v. Trilegiant Corporation & Affinion, Inc. , Court of Appeals, 2nd Circuit (September 2012), the court considered whether terms could be considered enforceable if the terms were sent by email after the formation of the online contract.

In this case, there were online terms in the sign-up page, but for a variety of reasons, Trilegiant couldn’t rely on these terms, and was obliged to argue that the emailed terms were binding. Trilegiant asserted that the members assented to an arbitration clause by signing up, and receiving the emailed terms at a later date, and then failing to cancel their membership during the “free trial period”. The Second Ciruit Court of Appeals took a dim view of this approach. In the U.S., a consumer may receive “actual notice” of the online terms, or “inquiry notice”. “Inquiry notice” occurs when the consumer has actual notice of circumstances where a prudent person would be on guard to the existence of terms. It’s a stretch, but can still result in enforceable terms. The court concluded that neither “actual notice” nor “inquiry notice” were provided by means of the emailed terms. The court concluded:

“We do not think that an unsolicited email from an online consumer business puts recipients on inquiry notice of the terms enclosed in that email and those terms’ relationship to a service in which the recipients had already enrolled, and that a failure to act affirmatively to cancel the membership will, alone, constitute assent.”

Lessons for business? Get advice on your online terms and sign-up process for any online contracting: including cloud-computing contracts, software-as-a-service, online products sales, license agreements and terms-of-use.

Related Reading:

• Facebook App: Dispute Resolution Terms Upheld

• Changing Online Terms Midstream

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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)“.

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In our earlier post - Patents in the Field (Part 1) – we reviewed the topic of patent exhaustion in a patent infringement case in which Monsanto sued a farmer who was collecting and replanting seed that contained Monsanto’s patented genetically-modified genes.

In Bowman v. Monsanto Company the US Supreme Court has decided to hear the appeal of the 2011 decision. In the earlier decision of the Federal Circuit Court of Appeals, Monsanto sued, claiming the second crop and the saved seeds infringed on its patent, because its patented technology existed somewhere in that crop. The farmer defended by claiming the defence of “patent exhaustion” – that any patent rights in the second crop of seeds were exhausted, and further use or sale of those seeds would not infringe Monsanto’s patent. The Federal Circuit appeals court rejected this defence, reasoning that by planting the commodity seeds containing the “Roundup Ready” patented technology, the farmer created an infringing article (i.e. the plant grown from the next generation of seeds). This replication of the patented article constituted an infringement, which was not excused by the “patent exhaustion” doctrine.

The US Supreme Court case of Bowman v. Monsanto will be closely watched and the final decision could be a milestone case in the area of self-replicating technologies and intellectual property in the agricultural industry.

Related Reading:

• Intellectual Property and Agriculture
• Infringement of a Patent on Higher Life Form

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Can a prior disclosure of an invention be fatal to a patent? And if so, what constitutes “disclosure” of the invention.

One of the central pillars of patentability is “novelty” – the invention must be new, the first of its kind in the world. If it’s not new, the patent application will fail or (if discovered after the patent has issued) the patent itself can be invalidated. Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2011 FC 1323 (CanLII) is an interesting judgement dealing with a device that was manufactured and rented to a third party for use in drilling an oil well in Texas prior to the relevant date of the Canadian patent. This earlier device invalidated the patent, since it constituted an “enabling disclosure” of the invention more than 12 months prior to filing of the patent application. In this case, to prove when the earlier device was invented and disclosed, an expert was called in to examine the metadata for the design drawings, to verify when the drawings were created.

The business lessons?

• Remember that a prior disclosure of an invention can be fatal to a patent. For the purposes of patent law, a “disclosure” of the invention can be as simple as using the invention or a prototype for a customer. For example, putting a single device into the hands of a customer without restrictions or confidentiality obligations has been held to constitute prior use which invalidated the patent.
• Experimental use of the invention may be permitted in certain circumstances. True experimentation will not be considered a “disclosure” for these purposes. However, a use will only be experimental if it is so in the mind of the user.
• If disclosure of the patented device was made on a confidential basis, it will not be considered a “disclosure” for these purposes, if handled properly. Therefore, confidentiality (and a properly drafted non-disclosure agreement) is critical.

Related Event: Interested in learning more? Join us on September 26, 2012 – Field Law is hosting a meeting of The Licensing Executives Society  (Calgary Chapter) on the topic of: The Perils of Disclosure: Invention Disclosure and Patent Grace Periods presented by Roseann Caldwell, Bennett Jones LLP. See link for details and registration.

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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.

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Last week, the ruling in Apple’s patent infringement lawsuit was released. Once upon a time the public was captivated by things like sensational celebrity trials. Now we have live-blogging of patent infringement verdicts. Oh, for simpler times!

In case you missed it, in a landmark decision that is certain to be appealed, Samsung was ordered to pay damages of over $1 billion for multiple infringements of Apple’s design and utility patents for smartphones and tablets. The infringement ruling covers trade-dress, design patents and utility patents including user-interface functions such as the now familiar pinch-and-zoom gesture, and the “rubberbanding” effect at screen margins.

What does this ruling mean? Here are a few thoughts:

• Experts have estimated that the average smartphone relies on 250,000 patented technologies that are in-licensed from various device and technology manufacturers around the world. While many patents are at issue in this lawsuit, Apple’s ‘915 patent (Patent No. US 7,844,915, Filing date: 7 Jan 2007)  for pinch-and-zoom and related scrolling gestures was central to Apple’s infringement claims. Pinch-and-zoom has become such an intuitive gesture that I’ve seen kids try and perform it on the screens of portable DVD players and seat-back TVs. This particular ruling will impact smartphone and tablet makers who rely on Android. But it’s important to remember that this is not an appeal-level decision, nor does it extend beyond the US, so time will tell how other smartphone makers respond in Canada or globally.
• The Android operating system would not offend Apple’s design and trade-dress rights (which cover the shape or appearance of the hardware), and Android has designed around the rubberbanding effect, so Android would not offend those claims of Apple’s patents. However, there is no doubt that Android smartphones and tablets all use pinch-and-zoom. The options are for Android (read: Google) to take a license from Apple, or design around with some alternate gesture. Invalidating the ‘915 patent would be another logical avenue. However, if that tactic had a good chance of success, Samsung would have succeeded by now.
• The jury form was so complex (have a look for yourself: Jury Form , courtesy of Groklaw) that observers were surprised at how quickly the jury returned a verdict. The jury’s findings and instructions will very likely be the subject of the appeal process.
• For a patent-by-patent, device-by-device breakdown of the verdict in this case, see this excellent review (courtesy of NDTV).
• Interestingly, the jury found that Samsung’s devices did NOT infringe Apple’s ‘889 design patent (see our earlier post: Apple and Samsung: The Design Patent Wars Continue).

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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.

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

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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“.

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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.

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