When parties are negotiating a new business deal – maybe an investment, joint-venture, research or a pilot project – they often agree to joint ownership of the resulting intellectual property, as an easy starting point.  Let’s look at one case involving trade-marks. 

Trade-mark law in Canada is clear that each trade-mark should have one owner.  That means one company, one person, one entity can own the mark… or, if there are two people who co-own a trade-mark, they must apply to register the mark as a partnership.  In JAG Flocomponents N.A. c. Archmetal Industries Corporation, 2010 FC 627 (2010), two companies entered into a contract in which they agreed to co-ownership of the mark FUSION. This flowed from the catch-all clause in their agreement that: “Any new products, designs, patents, inventions, calculations, and other intellectual property which arise directly or indirectly pursuant to or in consequence of this agreement shall be deemed to [sic] equally owned by the parties hereto.”  The FUSION mark was part of the “other intellectual property” caught by the agreement.

After a falling-out, one company registered the FUSION mark in its own name.  After a court battle over ownership, the court decided that the registration should be expunged. Since the parties agreed to co-ownership of the mark, the trade-mark application by one party rendered the registration invalid. 

Lessons for business?

• Beware of catch-all “joint ownership” clauses, as they should be carefully considered. Should any of the intellectual property be jointly owned? And if so, think through the implications of each situation. Important rights will flow from jointly owned patents or trade-marks, for example.
• As a practice point, a material misrepresentation in a trade-mark application (in this case, that little detail about joint ownership was left out) can result in expungement of the mark.  

Calgary – 09:00 

You download the software…you click “I accept”.  Now, who is on the hook? 

Two recent cases illustrate the different ways that End-User License Agreements (EULAs) will be upheld by the courts.

• Canada: In Bérubé v. Rational Entertainment Limited, 2010 ONSC 5545 (CanLII), a user in Ontario clicked through a license agreement when she opened an account with PokerStars, an online gaming site. The user later sued the site operator, claiming various damages. The user attempted to avoid the terms of the end-user license agreement by arguing that it was a standard-form contract that was against public policy because it was an online gambling site. (Online gambling is not legal in Ontario…though governments in Ontario and BC are getting into the business themselves). The court disagreed. A clause in the EULA was clear that “…the Software is not for use by …individuals connecting to the Site from jurisdictions from which it is illegal to do so.  PokerStars is not able to verify the legality of the Service in each jurisdiction and it is the User’s responsibility to verify such matter.” The case was dismissed based on the terms of the EULA, to which the user had assented.
• US:  A software vendor hired a subcontractor to install its software at the offices of the end-user – in this case, the US Air Force. The subcontractor allegedly made unauthorized copies of the software, so the software vendor sued the subcontractor, claiming breach of the terms of the EULA. The subcontractor denied that it was bound by the EULA. In BMMSoft Inc. v. White Oaks Techology Inc., 2010 WL 3340555 (N.D.Cal. August 25, 2010), the court decided that the subcontractor was not bound by the EULA, since it had clicked acceptance on behalf of the end user – the US Air Force – not on its own behalf.  The subcontractor had clicked through the EULA as agent for the end-user customer.

Software vendors and online service providers can take comfort that properly-worded end-user terms are binding. They also need to get advice so they know who will be bound by those terms.

Calgary – 09:00 MT

In my review of iPhone App Law, I have discussed the case of Turner v Storm8 (Complaint), a 2009 US federal class action lawsuit that alleged a privacy breach by an iPhone app developer.  The lawsuit alleged that Storm8, creator of “iMobster” and “Vampires Live,” wrote its software to collect phone numbers automatically when players downloaded the games. The developer blamed this privacy breach on a software glitch. 

The Wall Street Journal has reported a similar breach by Facebook app developers. Many of the most popular Facebook apps have been transmitting Facebook ID numbers to at least 25 advertising and data firms.  This information can be cross-referenced to compile detailed profiles of Internet users. In this case, the breach goes far beyond phone numbers, and appears to implicate a range of rich personal data that makes up the Facebook world. The practice would violate the terms under which Facebook permits developers to sell apps, and may violate the app developers’ own privacy policies. But that is cold comfort if it’s your identity that is compromised.

Lessons for business?

• A risk of this type is not confined to Facebook apps – privacy breaches could be caused by any third-party app developer, whether it’s on the Facebook, Android or iOS platform;
• If you engage a developer to create an app for your company, make sure your terms clearly address privacy issues. A breach of this type can be fatal to the app, and can spread to implicate the whole company if the breach is serious;
• If you are a developer, ensure that you carefully manage privacy issues. If the collection of information is warranted, it should be done properly. In Canada, the collection of personal information can be permitted if there is informed consent by the end-user. And you need to compare your information-handling practices against the terms of the SDK – for example, Apple’s iOS terms are clear that developers will be liable in the event of any breach of a user’s privacy rights.

Calgary – 10:00 MT

The Clean Tech sector is IP-intense, and patent protection strategy is front and centre for most clean tech companies. According to the Clean Energy Patent Growth Index (CEPGI), patent filings are on the rise in the Clean Tech sector. Results from the second quarter of 2010 show that U.S. issued patents are up in this sector almost 60 percent over the second quarter of 2009.  For Canadian companies in the Clean Tech industry, intellectual protection strategies will often start with patent prosecution in the US and internationally through the PCT international patent application system.  Canadian inventors can take advantage of the “IPC Green Inventory”, which was developed by the IPC Committee of Experts to facilitate patent searches relating to so-called Environmentally Sound Technologies (ESTs). 

Patent filings are up, and stock-market performance is encouraging in an otherwise rocky financial landscape. The Canadian S&P/TSX Clean Technology Index (launched in March, 2010) has now been up for 6 months tracking the results of TSX-listed companies whose core business is in “green technologies and sustainable infrastructure solutions.” 

Calgary – 09:00 MT

Technology commercialization starts with the invention or creation of something marketable – a new device, a tool, an algorithm, a software application.

Before you start to commercialize it, one of the first questions is: Who owns it? If an employee invents something marketable, employers will commonly claim that they own their employee’s invention.  However, in the case of patentable inventions, the Canadian Patent Act is silent on the question of whether an employer has any rights to an invention created by an employee. To the contrary, there is a presumption under Canadian law that an employee is the owner of his or her inventions, unless there is an express contract to the contrary, or the person was employed for the express purpose of inventing or innovating. The case of Techform Products Ltd. v. Wolda provides an interesting review of these issues, in a situation where the employer was ultimately found to have no rights to a valuable patented invention that was created for its business. 

I will be speaking today at UTI‘s Technology Commercialization Series: Commercialization Pitfalls: How to Avoid Them to review ownership issues.   

Calgary – 10:00 MT

 

For Canadian software companies who license their software in the US, this decision will be encouraging (Vernor v. Autodesk Inc. (September 10, 2010, US Ninth Circuit Court of Appeals, No. 09-35969). Timothy Vernor purchased several used copies of Autodesk, Inc.’s AutoCAD Release 14 software from one of Autodesk’s customers. Then he resold the copies on eBay. Vernor never installed the software or agreed to the terms of the software license. 

Is it copyright infringement to re-sell a used copy of software?

The “first sale doctrine” is a defence in the US that says no, it’s not infringement because a copyright owner’s right to control sale or disposition of the copyrighted work is exhausted after the first sale occurs.  In other words, owners of copies of copyrighted works can resell those copies without needing the copyright owner’s consent.

The essence of the court’s conclusion in Vernor is that a software license is an important exception to the “first sale” defence. This is because the court found that Autodesk had not sold copies but merely licensed copies of the copyrighted work.  Where an end-user license (or EULA) is a limited license agreement in which the copyright owner reserves title to the software copies and imposes significant use and transfer restrictions on end users, then this type of license is an exception to the “first sale” defence.  In the court’s words: a “software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.”  Canadian software vendors should review the terms of their end-user licenses to ensure that they can take advantage of this remedy in the US. 

Calgary – 10:30 MT

Since when are bow ties a patent issue? Since clothier Brooks Brothers was sued for a false-marking claim, related to the long-expired patent for the “Adjustolox” mechanism on their bow ties. Since the patents have expired but are still marked on the product, the company is technically open to a false-marking claim, and the appeals court in the U.S. recently ruled in Stauffer v. Brooks Brothers, Inc., No. 2009-1428, -1430, -1453 (Fed. Cir. Aug. 31, 2010) , that virtually anyone has standing to bring a lawsuit for false marking claims.

In our earlier post (Patent Marking: Update for Canadian Patent Owners), which addressed the Forest Group decision (Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009)),we noted that false-marking claims are, in the US, one of many strategies being used by competitors.  We also note that earlier this year, in the US decision in Pequignot v. Solo Cup (Federal Circuit Court of Appeals, June 10, 2010), the appeals court also decided that knowingly marking a product with expired patents creates a rebuttable presumption of an intent to deceive the public. In the Solo Cup case, the company was successful in rebutting the presumption by gathering evidence of its decision-making process, and convincing the court that its intent was to minimize manufacturing costs, not to deceive the public.

From a Canadian patent case, here’s another patent strategy: in one of the rare cases considering a patent infringement court case versus a patent re-examination before the Canadian Intellectual Property Office (CIPO), the Federal Court recently “froze” the re-examination proceedings, until the outcome of the patent infringement trial. In Prenbec Equipment Inc v Timberblade Inc. 2010 FC 23, the court decided that the nature of the evidence, and the ability to cross-examine witnesses, meant that the trial was the better venue to decide the issues. This is an important consideration in assessing tactics in the midst of patent litigation.

Calgary – 18:00 MT

 

 

ipblog.ca will be taking a break over the summer. We’ll be back in the Fall to pick up developments such as:

• Canadian Copyright Reform (with Parliament breaking for the summer, there will be no further Parliamentary debate on Bill C-32 until September);
• The US Supreme Court’s decision in the Bilski case (relating to patentability of business methods and software);
• Changes to the Canadian rules in assessing patentability for “computer-implemented inventions”;
• The Canadian Intellectual Property Office’s plans to expedite the examination of so-called “green technology” patent applications;
• Developments in licensing, trade-marks, internet law and trade-secret law.

Have a good summer. 

Calgary – 09:00 MT

The Electronic Frontier Foundation has published an interesting article on Apple’s iPhone Developer Program License Agreement under the (strange) heading “All Your Apps Are Belong to Apple“ which is garbled from both a grammatical and legal perspective.  The Developer Agreement has some zingers in it, to be sure, but it certainly doesn’t claim any ownership over developers’ apps.

If you are a developer, you own your apps. (Section 3.1 of Schedule 1: “…Apple shall not acquire any ownership interest in or to any of the Licensed Applications or Licensed Applications Information, and title, risk of loss, responsibility for, and control over the Licensed Applications shall, at all times, remain with You.”)

Calgary – 08:00 MT

The trade-mark Moto Mirror is registered in Canada for use with truck and automobile mirrors. However, the owner of the mark did not actually manufacture the mirrors. In a series of licensing agreements, the owner of the mark authorized other companies to make and sell the mirrors under the Moto Mirror brand.  This is common enough, and is permitted under Canadian trade-mark law, as long as the owner maintains the required degree of control over the “character or quality of the trade-marked wares”.  So what degree of control is required?

In Tucumcari Aero, Inc. v. Cassels, Brock & Blackwell LLP (March 9, 2010), the Federal Court of Canada reviewed this question.  The Court has reinforced the concept that indirect control will satisfy the requirement, and indicated that: “What is required is that the registrant be able to control product quality through the exercise of its contractual rights vis-à-vis the intermediary which, in turn, is entitled to control product quality under contract with the sub-licensee. So long as there is a continuity of quality control that can be effectively maintained by the registrant under the chain of contracts no special conditions or language are required.”

Lessons for business?

• When licensing trade-marks, make sure you get legal advice to ensure your license agreements are properly drafted;
• The court was clear that “no special conditions or language are required” as long as it is clear that the owner controls product quality through the chain of contracts.

Calgary – 08:00 MT

 

Do you have a patent in the US or are you a licensee of a US patent? Are your products marked correctly?

Canadian patent owners should review patent marking requirements in the US, in light of the recent Forest Group decision (Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009)).  This decision has reinterpreted the false marking provisions of U.S. patent law to expand the fines that can be imposed on patent owners and their licensees.  If an article is falsely marked with an incorrect patent number, the fine can be up to $500 for each falsely marked article. An article is falsely marked, for example, if the patent number is incorrect, or if there is a false suggestion that a patent is issued or pending, or a false claim that a particular issued patent covers the product.  

The U.S. law permits anyone to sue for the penalty and split any award with the federal government, so this has become another strategic tool in the marketplace.  Since the December 2009 decision, competitors have been scrutinizing (and suing) each other to determine if there is any basis for a false-marking suit.  

Canadian patent owners, licensees and manufacturers are advised to obtain advice to review their internal patent-marking policies, and to review the terms of patent license agreements to address patent-marking obligations.

Related Event: See our Events page (link to the right)

Calgary – 10:00 MST

Regardless of what you are distributing – shrink-wrapped CDs, online applications or smartphone apps – software licensing takes on an added layer of complexity when open source software issues are part of the mix.  The law in the US has been clarified thanks to the Jacobsen v. Katzer case, which was finally dismissed last month after the parties reached a settlement. As part of the settlement, a permanent injunction was entered, stipulating that Katzer must refrain from “reproducing …modifying … or distributing” the open source material.  (See our previous post: Open Source Update: Cisco Sued & New Ruling in Jacobsen vs Katzer).

To avoid GPL violations, make sure you get good advice on an OSS policy for your organization, and avoid the fate of Best Buy, Samsung, Westinghouse, and JVC – all of whom were named in a copyright infringement lawsuit filed by the Software Freedom Law Center (SFLC) in December 2009.

Richard Stobbe will be speaking at a conference in Calgary on April 9 on the subject of Open Source Licensing: Copyright & Beyond

Calgary – 09:00 MST

In the 1990s, researchers at the University of Saskatchewan developed a transgenic variety of flax known as CDC Triffid, which was genetically designed to be herbicide-resistant. The crop received regulatory approval in the mid-1990s, but was never adopted by Canadian farmers for commercial use, because of fears that its use would close export markets such as the European Union, which has a zero-tolerance for GMO foods.

Those fears have now materialized. The flax industry is scrambling to discover why CDC Triffid seeds appear to have propogated in Western Canadian flax fields, despite having been “decommissioned” fifteen years ago.  This story has all the makings of a science-fiction tale (indeed, the name of the crop comes from a sci-fi novel about carnivorous plants).  The intellectual property issues are also interesting, since the original research would have produced an invention subject to intellectual property rights – likely patentable in the same way that the transgenic crops developed by Monsanto and others have been patented (though there is no indication that CDC Triffid was ever the subject of a patent).

The most recent case where Monsanto enforced its patent rights over a farmer was in the 2009 case of Monsanto Canada Inc. v. Rivett, 2009 FC 317 (CanLII), where a farmer was hit with a damage award for his unauthorized use of Monsanto’s patented canola seeds.  In that case, the court reviewed the concept of the “innocent user” who finds a patented higher life form has “escaped” and started growing on his land. As noted in Infringement of Patent on Higher Life Form “Life forms have a way of getting up and moving around: seeds propagate and blow away, creatures crawl, viruses replicate and invade.”  The Triffid case is a perfect illustration.

Calgary – 07:00 MST

With a few weeks to go before the Winter Olympics, VANOC’s anxiety about official marks (what you might call “brand-wringing”) continues.  The list of protected terms was expanded in December (curiously, this order managed to pass before Parliament was shut down) to include the mascots like Quatchi, at right, and various other symbols of the events. 

Companies of all stripes – from small retailers of cheap knock-off T-shirts, to independent app-developers, to major financial institutions – are scrutinized by VANOC to see if their efforts run afoul of the rules.  It has become clear that the Olympic and Paralympic Marks Act has cut both ways.  VANOC has a powerful enforcement tool to use against infringers and pretenders.  On the other hand, the legislation is like a handbook for companies who are not official sponsors to determine exactly where the line is. For example, Scotiabank’s recent “Show Your Colours” campaign, and the new “International Collection” by Roots, both make use of carefully crafted, non-infringing design elements that evoke the excitement and energy of the Games, while scrupulously avoiding any offense under the Act. 

VANOC’s anxiety is understandable – sponsors have paid handsomely and expect protection.  But you can’t provide a handbook, then complain when people read it and follow it. 

Related reading: Ambush Marketing: The Names That Cannot Be Spoken… (Part 1)

Calgary – 09:00 MST

A mobile app is just like any other software application and should be properly licensed to end-users.  Even for free versions, the app developer is not giving it away, but merely making a copy available to the user under certain conditions. 

Recent updates to the iTunes Store software have made it possible for app developers to make full-text end-user license agreements (EULA) available to purchasers. Not many app sellers take advantage of this, though sophsticated game developers such as Electronic Arts have lost no time in using the improved tools to post full versions of their EULAs.  Developers who sell their apps through other channels – such as titles in Blackberry App World – will have to tailor their EULAs to each channel.

Developers should get advice on licensing their apps to protect their intellectual property rights. The default end-user license that is embedded in Apple’s SDK Agreement is generic and limited and developers should consider the benefits of inserting their own tailor-made license.

Calgary – 09:35 MST

The irony of this one won’t be lost on consumers.  After years of lecturing and lawsuits by the recording industry about the sins of copyright infringement, the tables are turned in this class-action lawsuit. 

The estate of jazz musician Chet Baker has sued the major record labels – Sony BMG Music, EMI Music, Universal and Warner Music – for copyright infringement claims that, if proven, may add up to significant damages. [Link to story and PDF of the claim] The claim alleges that the record industry has a backlog list of hundreds of thousands of songs which were published but for which copyright royalties were never negotiated or paid.  Using the metrics of statutory damages, each instance of infringement may attract a flat $20,000 liability for the recording industry, which means 300,000 songs create a potential $6 billion damage award.

This one will be closely watched in 2010.

Calgary – 10:00 MST

An organization has collected a wealth of online data including names, addresses, prices, photos, specifications, geo-location data, text, links and more.  Can you access their system, scrape the data and then repackage it for your own business?

In this case, the answer is no. An Ontario court has again shut down a data-mining operation in Toronto, where real estate broker Fraser Beach attempted to scrape and redisplay MLS data. The court dismissed Mr. Beach’s request to open up the MLS data.

The latest decision follows a similar battle in 2007, where an Ontario company (operated by the same realtor) asked the court to compel MLS to share its data. In Realtysellers (Ontario) Limited v. Toronto Real Estate Board, 2007 CanLII 50283 (ON S.C.), the court turned down this request, citing the MLS “Authorized User Agreement” which prohibits the kind of wholesale, unrestricted data mining that was the cause of the dispute.  The terms of the user agreement were instrumental in the court’s decision in both cases.

Get advice on how to protect your online data through the use of copyright and properly drafted online access agreements.

Calgary – 10:45 MST

Richard Stobbe’s article “Tips and Trends in CleanTech Licensing“  is published in this week’s edition of the Lawyer’s Weekly (Vol. 29, No. 28; November 27, 2009).  It discusses the issues of:

• pre-license preparation;
• licensing;
• improvements and enhancements;
• the regulatory environment; and
• patents and litigation.

Click here for the PDF version.

Richard is a member of the LES Clean Tech Committee, High Tech Sector and is currently the Chair of the Calgary Chapter of Licensing Executives Society. 

Related Reading: the Lawyer’s Weekly site.  

Calgary – 11:00 MST

Can a video game portray a character that looks like you, without your permission? There have been a number of disputes over the right of video-game publishers to use a person’s likeness – for example, the dispute over Kurt Cobain’s avatar in Guitar Hero 5, or the recent lawsuit over whether the images of certain professional boxers can be used in a video game. 

In a recent US case (Brown v. Electronic Arts Inc., Case No. 2:09-cv-01598 (US District Court, Central Cal.)), retired football player Jim Brown sued Vancouver-based EA over its use of his likeness in the popular Madden NFL game. This isn’t the first lawsuit over the use of football players’ images – last year, a group of players successfully sued the National Football League Players Association for claims arising out of royalty rates for the use of players’ images in EA games.  In the Brown decision however, the court rejected Brown’s complaint. 

In the US, video games are a form of protected expression qualifying for a free-speech defense, and EA made a successful free speech defense to this claim. 

The case turned in part on the fact that the character in the game was one of thousands of “virtual athletes”.  This particular character may have outwardly resembled Brown to football fans (they would have recognized his jersey number and designation as a running back), but Brown’s name was not used in the game or in advertising. If EA had made any of these mistakes – using his name or likeness in advertising – then they likely would have been tripped up by Brown’s Lanham Act complaint. This claim is based on the idea that an advertiser can’t falsely claim that a celebrity has somehow sponsored or endorsed their product.  EA did not attempt to signify that Brown endorsed the games, so EA did not get tackled by the Lanham Act claim.

Calgary – 13:45 MST

Where an infringer carries on with the infringing activity after the copyright owner has sent notice, damages can be higher.  This is the finding of a Federal Court judge in Microsoft Corporation v. 1276916 Ontario Ltd. (2009 FC 849)(Sept. 17, 2009).  In that case, Smart Buy, a computer retailer in Ontario, was selling PCs loaded with pirated copies of Microsoft software.  Smart Buy continued its infringing activities not only after warnings from Microsoft, but even after the lawsuit commenced in Court.  The court awarded statutory damages of $80,000 and punitive damages of $50,000.  The individual business owner was found personally liable.

Other recent copyright infringement cases have resulted in similar damage awards in Canada:

a)        $200,000 in punitive damages, $100,000 statutory damages against the individual defendant and $100,000 against the corporate defendants (Microsoft v. 9038-3746 Quebec Inc.)

b)        $100,000 in punitive damages and statutory damages of $20,000 per infringement (Louis Vuitton Malletier S.A. v. Yang)

c)        $300,000 in punitive damages comprised $200,000 against the individual business owner, and $100,000 against the other defendants (Louis Vuitton Malletier S.A. v. 486353, B.C. Ltd.)

d)        $50,000 in punitive damages against all of the defendants jointly and severally (Microsoft v. PC Village Co. Ltd.)

Calgary – 10:00 MST