Archive for August, 2007

Atari & RIM in Copyright Fight

header_03.gifRIM has dealt with its share of intellectual property infringement claims.

In this latest chapter, iconic video-game maker Atari has accused the Blackberry maker of infringing copyright in two video games: Breakout and Asteroid. Both games first went to market in the 1970s. Atari alleges that the copyright in these games was infringed in the creation of RIM’s games BrickBreaker and Meteor Crusher, both of which were created for bored executives on their handhelds…executives who probably used to play Atari’s Breakout in 1977.

Atari’s lawyers issued a series of threats last year, and RIM decided to take the initiative by suing Atari in Ontario in October 2006. Atari quickly registered copyright in the two games and responded by trying to move the case the US.

In an Ontario decision released earlier this month Research in Motion Limited v. Atari Inc., 2007 CanLII 33987 (ON S.C.) Atari suffered a set-back when the court sided with RIM in this initial skirmish. The case will likely proceed and will be interesting to watch.

Calgary –  23:10 MST

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The Journey of a Thousand Infringements: IP In China

future-cola.bmp

Maybe the journey of a thousand infringements starts with one bottle of “Future Cola”.

The ongoing battle between Groupe Danone and its Chinese joint-venture partner Wahaha is now well documented around the internet.  In recent months, the dispute has spiralled into litigation, arbitration, and competing press-releases. 

In 1996, pursuing a model that is popular with many Western companies, Groupe Danone, the French food-and-beverage giant, decided to jump-start its foray into China by partnering with a well-positioned local player.  Wahaha, a successful Chinese beverage maker, already had a growing business in iced tea, fruit drinks, water and soft drinks.  Its “Future Cola” brand, with red packaging reminiscent of another well-known cola product, is already making inroads into the US market.

The joint venture seemed to be a mutually profitable arrangement until allegations started surfacing this year that Wahaha was producing and selling identical products on its own, outside the scope of the joint-venture, essentially cutting Danone out of these sales and infringing the intellectual property provisions of the JV agreement. Danone does not seem to have faith in the ability of the Chinese legal system to enforce its intellectual property rights, and has opted for a lawsuit in the US and an arbitration claim in Sweden.  Wahaha responded by initiating its own arbitration claim on home turf in China.

Whatever the outcome, the dispute now stands as a cautionary tale for Western companies doing business in China. Make sure you get good local counsel, have a back-up plan for enforcement and be careful who you partner with.  Hot opportunities abound, but beware: even the biggest players can get their fingers burned when playing in China. 

 

Calgary – 10:22 MST

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Canadian Patent Update

The Canadian Intellectual Property Office has announced a few changes to patent practice this summer. These are a few of the highlights:

  • Changes in Title: For changes in ownership that occurred prior to the filing of an application for a patent, applicants now need only provide a declaration (rather than evidence) of the chain of title.
  • “Small Entity” Definiton: Small entities pay lower fees for filing. The definition of “small entity” for these purposes is now defined as an entity that employs 50 or fewer employees.  Entities that are controlled directly or indirectly by an entity that employs more than 50 employees are excluded, as are entities that have entered into a license with an entity that has more than 50 employees.  Universities also qualify as small entities by definition.
  • Electromagnetic Signals: Claims to electromagnetic and acoustic signals are forms of energy and are not patentable. This does not apply to methods, processes, machines or manufactures involved in the generation, transmission, reception, or processing of such signals.

 

Calgary – 11:10 MST

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Breakthrough in Open Source Litigation

In our earlier post about open-source software, we made reference to the SCO Litigation, a sprawling nest of lawsuits entangling SCO, IBM, Novell, Red Hat, and licensees of the Unix software system such as DaimlerChrysler. 

The central issue was SCO’s contention that IBM had, without SCO’s authorization, contributed proprietary Unix code to the open-source Linux system.  If Unix was owned by SCO and the code was contributed without SCO’s consent, then this allegation threw doubt on the legal status of Linux and in turn the entire open-source service industry that has grown up around Linux.

Last Friday, a US court ruled that the copyright in the Unix system belongs to Novell, not SCO.  This deflates SCO’s central claims for relief for copyright violations and breach of contract.  The litigation has taken on a life of its own, so I’d be surprised if Friday’s ruling wasn’t appealed.  But it does provide some measure of relief for proponents of open-source.

Calgary – 11:50 MST

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Internet Services Contract Upheld

In the US case of Asch Webhosting, Inc. v. Adelphia Business Solutions Inv., LLC, No. 04-2593, 2007 WL 2122044 (D.N.J. July 23, 2007)  (Link to Evan Brown’s Post) the court upheld a limitation of liability clause in a dispute between an internet services provider (ISP) and its customer. 

After the customer was accused of spamming, in violation of the ISP’s acceptable use policy, the ISP decided to terminate service, giving the customer 30 days to find a new provider.  At the end of the 30 days, the ISP cut-off service as threatened, prompting the customer to sue for $1.4 million in consequential damages. 

The court upheld a limitation of liability clause in the service contract, which capped the ISP’s liability at the amount paid by the customer for the services.  The court reviewed several factors in coming to its conclusion:

  • This was a business-to-business contract, with equal bargaining power between the parties;
  • The customer was given ample warning of the impending cut-off;
  • The clause was clear and unambiguous;
  • The ISP relied on spamming complaints in good faith and there was no evidence that the ISP’s actions were malicious or in bad faith.

So you mean the fine print is there for a reason after all?? 

 

Calgary – 11:25 MST

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Canadian E-Commerce Update

Online sales in Canada grew by 40% to $49.9 billion last year.  In the retail sector alone, more than 15% of retailers in Canada made online sales in 2006, up from only 10% the previous year.  A pair of new Supreme Court of Canada decisions has clarified e-commerce law in Canada by upholding mandatory arbitration clauses and class-action waivers. 

1.    Dell:  For a few days in 2003, Dell’s website contained a pricing error where certain handhelds were incorrectly offered at fire-sale prices. Although Dell moved quickly to correct the errors, a number of consumers managed to place online orders at the incorrect prices.  Dell refused to honour those orders.  In response, the consumers tried to institute a class action lawsuit against Dell.  Dell insisted that the matter had to go to arbitration under the terms of the online contract.  Enter the lawyers.

In the resulting case of  Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, the Supreme Court of Canada upheld Dell’s online contract and the case was referred back to arbitration.  Although Dell’s online contract did not appear on the sales page (it was merely referred to via a hyperlink) the Court decided that this was not fatal to the enforceability of the contract.

2.    Rogers:  The case of Rogers Wireless Inc. v. Muroff, 2007 SCC 35 involved a dispute about wireless roaming charges.  In that case, the Court applied the same principles as in Dell and upheld a mandatory arbitration clause in the Rogers service contract. 

As we noted in our earlier post mandatory arbitration clauses and class-action waivers are now ineffective in Ontario and Quebec under consumer protection legislation. 

 

Calgary – 10:45 MST

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