A recent article in the Globe and Mail shows that VC and government investment in Canadian cleantech remains strong, but the markets are not responding due to the relatively small size and short-term underperformance of the sector.  In Alberta, cleantech investment has been given a boost by the federal government’s Sustainable Development Technology Canada (SDTC) fund, which announced $53 million for 17 new funded projects in July, four of which are either based in Alberta or have a direct connection to Alberta technology.

SDTC is now accepting applications under the NextGen Biofuels Fund™, and information on the Fund and applications details are available at www.sdtc.ca.  On a related note, the Global Clean Energy Congress takes place in Calgary in November.

Calgary – 07:00 MDT

 

In our earlier posts [Amazon Business Method Case to be Appealed] we reveiwed the case of the (infamous) Amazon 1-click patent, a case which is currently on appeal. The appeal was heard in Toronto this summer and a decision may come down in late 2011. In light of the Federal Court decision in Amazon.com Inc. v. Commissioner of Patents 2010 FC 1011 , the Canadian Intellectual Property Office (CIPO) has revised its practices. New practice guidelines are now in effect, replacing the contrary guidance in the MOPOP…. until the Federal Court of Appeal hands down its own decision. Stay tuned.

Calgary – 07:00 MDT

 

If the health of an industry is measured by the litigation it spawns, then the app and gaming economy is going strong:

• Copyright: Fantasy Flight Publishing has sued a European app-developer, Puffin Software, for alleged infringement of copyright in a medieval-themed game (Fantasy Flight Publishing, Inc. v. Puffin Software et al. U.S. District Court, District of Minnesota Case No. 11-cv-01928, Filed July 15, 2011). Fantasy Flight claims that Puffin’s iPad title “Viking Lords” is an infringement of copyright in the board game BattleLore owned by Fantasy Flight. In the claim, Puffin allegedly approached Fantasy Flight to pitch an iPad version of BattleLore, and when there was no uptake, Puffin decided to go ahead and publish the game under its own title.  The case will involve an analysis of the elements of each game, and a breakdown of functional and original elements, as in the Sony case (below).
• Patent: App-developer Zynga has been sued in Segan LLC v. Zyna Inc. for alleged infringement of Segan’s U.S. Patent No. 7,054,928, which was issued for a system for accessing “enhancement content” on the internet. The claim alleges that Zynga titles such as FarmVille, PetVille, and FrontierVille infringe the patent.
• Copyright: In Dath v. Sony Computer Entertainment America Inc., 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. The plaintiffs could not show actual copying, so they had to rely on the US concept of access and substantial similarity. Remember, copyright does not protect ideas, but merely the form and expression of ideas. In this case, there was no substantial similarity of expression of ideas. In this analysis, the court reviewed elements of expression such as plot, themes, dialogue, mood, settings and characters, and concluded that the works were not similar and no infringement occurred. 

Calgary – 07:00 MDT

 

In our earlier post (Myriad Issues: Patentability of Isolated DNA), we reviewed the US decision which causes ripples through the life sciences world by deciding that isolated DNA sequences were not patentable subject matter since they were “products of nature”. Myriad’s invention covers two isolated human genes, BRCA1 and BRCA2, and mutations in these genes are associated with a predisposition to breast and ovarian cancers. The recent decision by the US Federal Circuit Court of Appeals in The Association For Molecular Pathology v. USPTO & Myriad has reversed the lower court’s finding. The appeals court held last week that isolated DNA can be proper subject matter for patentability, provided the invention meets other criteria such as novelty and non-obviousness. Here, the inventors had isolated the DNA sequences and in doing so had changed the DNA through inherently transformative steps, thus bringing the invention into patent-eligible subject matter. 

Calgary – 07:00 MDT

 

 

In a recent Federal Court of Appeal decision in Canada (Corlac Inc. and National Oil Well Canada Ltd. v. Weatherford Canada Ltd., 2011 FCA 228) the court clarified whether there is a general duty of good faith on the part of patent applicants in Canada. Paragraph 73(1)(a) of the Patent Act is clear that a patent application is considered abandoned if the applicant does not “reply in good faith” to the examiner. However, once the patent issues, any “good faith” duty is extinguished since the duty relates only to good faith in the prosecution of the patent application. The court has clarified that any alleged breach of this duty cannot be used to attack the validity of an issued patent. Post-issuance, other remedies must be used, such as section 53(1), for allegations of misrepresentation.

In Canada, this clarification of the law helps to allay fears that an “inequitable conduct” doctrine was creeping into Canadian law (for example, G.D. Searle & Co.  et al. v. Novopharm Limited et al. (in 2007) and Janssen-Ortho Inc. v. Apotex Inc. (in 2008) both explored these concepts).

This marks a distinction from US patent law, where the inequitable conduct doctrine can be used to attack an issued patent. Even in the US, the United States Court of Appeals for the Federal Circuit in Therasense, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011), has scaled back the impact of this approach, calling it the “atomic bomb” of patent law. In patent law, this is one bomb that has been defused in Canada.

Calgary – 07:00 MDT

 

 

In the US, a few updates on the patent front:

• The House version of the patent reform legislation passed (the Leahy-Smith America Invents Act ) in late June, with broad support. You may recall that the US Senate passed its own version of the patent reform bill in March. The House and Senate bills must now be reconciled, with another vote on compromise legislation before it becomes law.
• In a recent US decision, a court found that “induced infringement” can be established without showing actual knowledge of the infringed patent.  “Induced infringement” under US patent law traditionally requires that a party actually knows that the infringed patent exists.  In Global-Tech Appliances, Inc. v. SEB S.A. (PDF), the US Supreme Court decided that wilful blindness will be enough to establish induced infringement. Canadian inventors should be aware that actively ignoring information or taking deliberate actions to avoid learning of a competitors patent will not help in avoiding a finding of induced infringement, and thorough patent searching is required when developing patentable inventions.

Related Reading: Willful Blindness of a Patent Is Sufficient to Show Knowledge of That Patent for Purposes of Induced Infringement (Licensing Executives Society)

Calgary – 07:00 MT

 

This is the last in our series on the recent landmark SCC decision in Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27. There is one point that is worth emphasizing from this decision, and that relates to the question of when an earlier common-law or unregistered mark can trump a later registered mark. 

Bear with me as we get into the thickets of the Canadian Trade-marks Act. The SCC decision to expunge a registered mark rested in part on the analysis that prior “use” under Section 16(a) of the Act was sufficient to displace the later registration. To put this another way, use since 2007 of the trade-mark XYZ (No. 1) for shoes can be used to challenge and cancel a registration for the trade-mark XYZ (No. 2) for shoes, when that later registration of XYZ (No. 2) was based on use since 2009. With me so far? This comes straight out of the reference in the decision: “Because Masterpiece Inc.’s use preceded Alavida’s proposed use, Alavida was not entitled under s. 16(3) to registration of its trade-mark.” The ambit of Section 16(3) includes not only a mark that has been used in Canada, but also a mark that has been made known in Canada; and it includes any trade-name that had been previously used in Canada. The term “made known” has a special meaning. A mark is “made known” only if it is used outside Canada and (1) the associated products are distributed in Canada, or (2) the associated products or services are advertised in print or through “radio broadcasts ordinarily received in Canada”, and it has become well known in Canada by reason of the distribution or advertising. So this test has to be met in order for an earlier mark that is simply “made known” to trump a later registration.

It’s also worth noting that previous use or making known of a confusing trade-mark will not invalidate a registration if that mark or trade-name has been abandoned, and it’s up to the owner of the earlier mark to establish that he had not abandoned the confusing trade-mark or trade-name. 

Lessons for business?

• Full trade-mark clearance searches are an essential step before you apply to register your mark. However, to be effective these searches must include common-law sources that can catch marks that are used or “made known”. Even then, it’s important to understand that a search cannot necessarily reveal whether such a mark would meet the test described above, and further research may be required.

Calgary – 07:00 MT

 

Here’s something that we’re likely to see more of: the app patent dispute. Mobile apps are regularly mixed up in copyright or trade-mark complaints, trade secret disputes (occasionally), and privacy issues (often). In Lodsys LLC. V. Combay Inc. et al., an allegation of patent infringement has been levelled at a group of iPhone, iPad and Android app developers, including the publishers of the popular titles “Twitterific”, “Quickoffice” and “Mega Poker Online Texas Holdem”. According to the complaint, the targeted apps infringe a method patent owned by Lodsys, entitled “Methods and systems for gathering information from units of a commodity across a network” (US Patent #772,078). One defence to such an allegation is that the patent is licensed by the alleged infringer, and that’s where Apple comes in. Apple has reportedly intervened to raise the defence that the use by the app developers is covered by a license that Apple previously negotiated with the patent owner.  Another defence is that the patent in question is invalid and another company in an unrelated lawsuit is challenging the validity of Lodsys’s patent portfolio.

Calgary – 07:00 MT

 

In our earlier post – Intellectual Property & Agriculture – we reviewed the issues around patented herbicide-resistant seeds. A recent Federal Court of Appeal decision deals with patented machinery in the agriculture industry. To be patentable, an invention cannot be obvious to someone who is skilled in that industry. In other words, the invention must be “non-obvious”. In Bridgeview Manufacturing Inc. v. Central Alberta Hay Centre 2010 FCA 188, the court reviewed the question of whether a particular bale processor infringed the patent owned by Bridgeview. The alleged infringer fought back by saying the patent was invalid due to obviousness.  In Canada, the court uses a four-part test to determine whether a patent is invalid for obviousness:

1. Identify the hypothetical “person skilled in the art” and the relevant common general knowledge of that person. 
2. Identify the “inventive concept” of the patented claim .
3. Are there any differences between the “state of the art” and the “inventive concept” of the claim in the patent?
4. Viewed without any knowledge of the alleged invention as claimed, would those differences be obvious to the “person skilled in the art” or do they require any degree of invention?

By this analysis, the court found that the patent was not invalid for obviousness and the appeal was allowed on that point.

Calgary – 07:00 MT 

 

 

Artists mash-up images, text and audio all the time and have been doing so for many years. When is “appropriation” considered “transformative”?  If you use someone else’s image to create something, is the new work simply a copy of the original image, or is it transformed into a new original work of art? 

If it’s just a slavish copy, then you need consent of the owner of the original image. Without that consent, you might be infringing copyright.  If it’s transformative, then is the appropriation forgiven since it results in something new and original?

Consider the case of photographer Patrick Cariou and appropriation artist Richard Prince. Earlier this year, a US District Court sided with Cariou in his copyright claim against Prince, based on Prince’s use of Cariou’s photographs of Rastafarians. The court was clear that the scope of Prince’s copying was substantial compared with the “slight transformative value”. In other words, there was a whole lot of appropriation and not much transformation. As a result, the fair use defence didn’t hold up.

The next question is the obvious one: where is the line between the two?  Andy Warhol made a career out of appropriation. His works - which borrowed everything from Campbell’s soup cans to press photos of Jackie Kennedy - were the subject of numerous complaints and lawsuits, all of which reportedly settled out of court. Artist Jeff Koons has also made a successful career out of transformative works, though he has often fallen on the wrong side of court decisions. In the 2006 US Court of Appeals decision in Blanch v. Koons, Koons successfully raised a “fair use” defence. This claim arose from the use of an image of the plaintiff’s copyright-protected photograph in a Koons collage painting entitled “Easyfun-Ethereal”. The court considered this use to be highly transformative, where the original image was used as “raw material” for a completely different type of work.

Calgary – 07:00 MT

 

Last week the US Supreme Court (SCOTUS) released its decision in the long-running patent infringement case between i4i, a Canadian software company, and Microsoft. (We’ve been following the case here). Microsoft has now run out of legal options. At trial, the jury found that Microsoft willfully infringed i4i’s software patent and that Microsoft failed to prove invalidity of the patent.  Microsoft appealed the original trial decision. That appeal was dismissed. Microsoft filed another appeal for a en banc re-hearing. That appeal was dismissed. Microsoft challenged the validity of the i4i patent. The patent was upheld, and the USPTO denied Microsoft’s second application for a re-examination. Microsoft appealed up to the SCOTUS and that appeal has now been dismissed (see the full decision here). In the US, the Patent Act is clear that a patent is presumed to be valid and in order to establish invalidity, the party who is challenging the patent must present “clear and convincing evidence”. Microsoft failed to provide such evidence and the original infringement decision stands.

One of the interesting elements of the case was Microsoft’s allegation that i4i had previously sold software (known as S4) which embodied the patented invention. If true, this would have impacted the validity of the patent that Microsoft had infringed. The S4 source code had been destroyed years before the patent infringement litigation, so evidence came from S4’s two inventors, both of whom testified that the S4 software did not embody the invention claimed in the infringed patent.  Microsoft now has to face the $290 million damage award and permanent injunction that bars the sales of certain versions of Microsoft Word.

Calgary – 07:00 MT 

 

Last week the Supreme Court of Canada (SCC) released a significant trade-mark decision in Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27.  It represents a major review of the legal concept of “confusion” in trade-mark law, as well as the vexing question of registered versus unregistered or “common law” trade-mark rights.

In this case, Masterpiece starting using its MASTERPIECE brand in 2001 in Calgary, Alberta, for retirement residences. However, the brand owner did not register the marks. A few years later, another company, Alavida, based in Ottawa, Ontario, applied to register the mark MASTERPIECE LIVING for similar services, and that application matured to registration in 2007, claiming use since 2006. So we have unregistered marks used since 2001 in Calgary, and a registered mark used since 2006 in Ottawa. Which one should prevail? 

The SCC agreed with Masterpiece that Alavida’s registered mark (the later one, based in Ottawa) should be cancelled, based on confusion with the earlier unregistered mark. This is because the later registered mark failed to survive the confusion analysis, on the assumption that both marks are used in the same geographic area. In reality, the marks were never used in the same region. However, for an owner of a registered trade-mark to have exclusive rights to the trade-mark across Canada, that mark cannot be confusing with another previously used trade-mark anywhere in Canada.  Even if that previously used mark is not registered.  Put another way, an unregistered trade-mark in Canada can be the basis of a challenge to a registered mark.  

Lessons for business:

• This case makes it clear that common-law trade-mark rights are enforceable in Canada. That’s good news for brand owners. However, it’s also important to remember that with an earlier application and registration, Masterpiece would have avoided this lengthy and costly battle since their registration would have blocked the later entry of Alavida’s trade-mark application.
• The importance of effective trade-mark searching is critical to a successful trade-mark application. Consider clearance searches and an availaibility opinion as part of your risk mitigation strategies for the launch of a new brand, or the registration of a long-standing unregistered mark.

Calgary – 07:00 MST

Patent owners have to tread carefully when they send cease-and-desist letters for patent infringement.  In a 2003 case, Imaging, Inc. v. Coyle, 340 F.3d 1344 (Fed. Cir. 2003), the court found that the patent owner was subject to the jurisdiction of the state of the recipient of the cease-and-desist letter. In other words, even though the patent owner had no ties or contacts to the state where the infringer was located, the “nasty lawyer’s letter” was enough to establish those contacts to that particular state. Jurisdiction is critical in patent enforcement strategy, since the patent owner typically makes a careful choice about the court in which it will pursue an infringement claim – for example, to obtain a home-field advantage in its own state. 

However, in a recent US decision (Radio Systems Corp. v. Accession, Inc., No. 10-1390 (Fed. Cir. Apr. 25, 2011), the Federal Circuit decided that the cease-and-desist letter was not sufficient to establish jurisdiction over the patent owner, even in a situation where the patent owner had engaged in marketing the patented article in that state.  This is good news for Canadian patent owners who can take strategic enforcement steps against infringers in another state – if these steps are taken carefully – without fearing that they will become subject to the jurisdiction of the courts in that state.

Calgary – 07:00 MDT

 

When a popular iPad app aggregates news articles and re-packages them for reading on the iPad, is it copyright infringement?

The Washington Post and a dozen other media companies would say yes.  Zite, the Canadian app developer, argues the content is aggregated in much the same way that Google and other search engines crawl and index web content. Is there a difference between the two?  This is reminiscent of the early days of internet copyright disputes (in 1997), when the Washington Post and other media companies sued Total News Inc. for aggregating and framing news articles on the Total News webpage. The Washington Post had the same complaint as they now have with the Zite app: namely, that ads are removed or obstructed in the process, and the media company’s ad revenue is threatened. 

Other US lawsuits have established that certain types of framing, such as the reproduction of thumbnail images, can be excused as “fair use”. Google successfully raised this defence in the US decision in Perfect 10, Inc. v. Amazon.com, Inc. [PDF] based on the “transformative” nature of the copying. 

Calgary – 07:00 MDT

 

A recent app dispute between the Globe and Mail newspaper, and Spreed Inc., a Toronto-based app developer, highlights the risks with outsourcing app development, for both companies and developers.  Spreed developed an iPhone app news reader for the Globe, which was popular enough to pull in 700,000 readers. For whatever reason, the Globe later decided to develop its own app inhouse.

When the Globe’s inhouse app was launched, Spreed issued a software update to the users of Spreed’s Globe and Mail app. Updates provide bug fixes, upgrades to a new iOS, or new functionality – at least that’s what users expect. However, in this case, the update peeled off the Globe and Mail user-interface, and transformed the app into something new called “Free Press News” – a generic news reader no longer associated with the Globe and Mail.  Why can Spreed do this? Because, according to them, they own the code.  Lessons for business?

• Get advice. If you’ve hired an independent app developer, then check your contract: who owns the code? This becomes critical when the relationship breaks down – in this case between the content-provider and the app developer.
• App ownership is important in other situations including: privacy (who has access to what information during and after the contract?), and transfer of IP rights (let’s say you sell your company and want to transfer all the intellectual property – including your popular iPhone or Blackberry app. You can’t transfer the code if you don’t own it).

Calgary – 07:00 MDT

 

My article Software Licensing in the Cloud  [PDF copy] is published in the May 6th edition of The Lawyers Weekly, which addresses the legal issues arising in the use of “cloud computing” services: including data handling, jurisdictional issues, warranties and service levels, customization and subcontracting, and licensing models.

Contact me at the Intellectual Property and Technology Group at Field LLP for advice on your cloud computing licenses.

Calgary – 07:00 MDT

There seems to be a run on litigation by co-founders of Facebook. So if you’re one of them, get in line. As John F. Kennedy observed “Victory has a thousand fathers, but defeat is an orphan.” The many technology business ventures that have died and withered away had parents who are now too busy with other things to dig through seven-year old emails or back-of-napkin agreements. However, for the Facebooks of the world, there will always be co-founders to contend with. 

Made famous in the popular movie The Social Network, the Winklevoss brothers recently settled (or were told to accept settlement for) their “zombie lawsuit” against Facebook for roughly $65 million. Eduardo Saverin settled his own claim. Next in line is Paul Ceglia, a man who recently stunned observers when he retained a high-powered law firm, refiled his claim for 50% of Facebook and produced evidence – including seven-year old emails and a back-of-napkin agreement – to support the allegations.  In the lawsuit Ceglia claims that, under a 2003 contract between him and Mark Zuckerberg, he owns at least 50% and up to 84% of Facebook. Facebook was founded in 2004 and now has a market capitalization of $50 billion+ and more than half a billion active users. [See: Ceglia v. Zuckerberg and Facebook, Inc., No. 10-CV-569A, United States District Court, W.D. New York, in which Facebook won a preliminary skirmish over jurisdiction.]  The lessons for business?

• The term “get it in writing” can cut both ways. A written contract can breathe life into an otherwise unlikely claim such as Mr. Ceglia’s. Depending on its content, it can also protect a start-up company when intellectual property ownership claims come out of the woodwork. Start-up technology companies should ensure their critical intellectual property does not become encumbered with early-stage promises about joint ownership or perpetual revenue sharing.
• The “paper trail” should be analyzed and cleared in the course of various early-stage investments and transactions. When an early-stage company is an acquisition target, or it receives a substantial investment, it is common for all of these ownership issues to be flushed out and addressed in the course of the transaction.

Calgary – 07:00 MDT

 

As a follow-up to our earlier post (To hack or not to hack…), here’s a reason NOT to hack. Evony LLC, a maker of multi-player online games, has successfully sued Philip Holland, a “botter” who had developed a task automator for one of Evony’s games. By circumventing the copy protection measures in one of Evony’s titles, Mr. Holland developed a bot that automatically completed tasks and effectively played the game for players.

In Evony, LLC v. Holland, Dist. Court, WD Pennsylvania 2011  the company obtained a permanent injunction, an order for impoundment and destruction of copies of the game and bots, as well as damages of $300,000, plus lawyers’ fees, costs and interest.  The judgement came so swiftly (they only filed their claim in January 2011) because Mr. Holland failed to file a defence. The case was based, in part, on breach of Evony’s Terms of Use.

Related Reading: our post on a World of Warcraft botter: Apps, Bots and Workarounds – Part 1

Calgary – 07:00 MDT

 

 

That is the business question for many in the software industry, including Microsoft, Sony and Twitter.

Software companies have to consider whether to embrace the hacking (…or shall we say “custom development”) culture of their customers, or gird for battle against the hackers. Mashable’s interesting article (Xbox Kinect vs. Sony PS3: How 2 Companies Handle Hacking) reviews the different approach taken by Microsoft which is (uncharacteristically) opening up its popular Kinect gaming console, and Sony which is suing customers who hack into PlayStation 3 [Link to Sony’s Complaint against hacker George Hotz is here 1MB PDF ].  Big old multinationals like Microsoft and Sony aren’t the only ones who have to face this question. New technology upstarts like Twitter are also wrestling with the problem: Twitter recently told developers to back off, after complaints of privacy violations and fragmented user experience. Companies offering software of any kind are finding that customers – both individual consumers and corporate users – are accessing the code, unlocking, jaibreaking and building their own functionality, whether or not the vendor has approved this.  My recent article on Software Licensing in 2011 [PDF] reviews the issues for software vendors.

Related Reading: Apps, Bots and Workarounds

Calgary – 07:00 MST

The Canadian Intellectual Property Office announced last week that the new clean-tech patent rules are now in force. The new rules officially came into force on March 3, 2011. This will permit applicants to obtain expedited prosecution of applications when the invention is related to green technology. This requires a declaration by the applicant that the technology, when commercialized, would help to “resolve or mitigate environmental impacts or conserve the natural environment and resources”.  For further information, see CIPO’s page on Expedited Examination of Patent Applications Related to Green Technology

Related Reading:
CleanTech & Clean Energy: Innovation vs Patents

CleanTech in Calgary

The National Post interviewed Richard Stobbe for an article on the plan to fast-track cleantech patent applications: “Canada plays catch-up on cleantech patents“

Calgary – 07:00 MDT