Intellectual Property & Jail Time


Can intellectual property theft or infringement lead to jail time?

  • An employee can walk out the door with all kinds of interesting information. Customer lists, business methods, intellectual property of all descriptions. Last week a US jury convicted an ex-employee of Goldman Sachs of trade-secret violations arising out of his theft of software code.  Mr. Aleynikov, a computer programmer, violated the employer’s confidentiality policy when he purloined portions of the company’s code and then quit to join a rival firm. The algorithms in such code provides a critical edge in such a competitive industry as high-frequency stock trading. The charges flow from the Economic Espionage Act dealing with trade-secret protection, a US law that doesn’t have an exact equivalent in Canada. Mr. Aleyniko faces up to 10 years in prison when he is sentenced in March, 2011.
  • In Canada, we don’t have trade-secret protection legislation, and jail-time is extremely rare for white-collar theft of trade secrets or intellectual property. Under the criminal remedies section of the Copyright Act (Section 42), imprisonment is a possible punishment, but is rarely used in practice.  In R. v. Borg, [2007] O.J. No. 3287, a company was convicted of eight offences under the Copyright Act relating to importation and sale of forged copies of software.  The person who operated the company was convicted of two offences and the individual was sentenced to 60 days in jail.  However, that sentence was deleted on appeal.
  • In the recent case of R. v. Hirani (2010), 2010 BCPC 205 (B.C. Prov. Ct.), the Canadian Border Services Agency intercepted shipping containers which contained knock-offs of Chanel, Prada and Gucci bags. Undercover officers later attended at the store to which the goods were destined and nabbed the perpetrator.  The accused pled guilty and was fined $4,000, but avoided anything more serious. Jail time was technically part of the sentence, but was served in the community.

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Calgary – 08:00

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Update: Canadian Online Defamation & Hyperlink Case

The Supreme Court of Canada (SCC) is currently considering its verdict in the long-running case of Crookes v Newton The BC Court of Appeal’s 2009 decision (in Crookes v. Newton 2009 BCCA 392) held that Mr. Newton was not liable for hyperlinks to defamatory content. In short, if a person merely hyperlinks to a defamatory site, that act alone does not make that person a “publisher” of the defamatory material found at the hyperlinked site.  Mr. Crookes appealed that decision to the SCC. Oral arguments in the case were heard this week, and a decision is expected soon. With luck, the ruling will clarify the law on liability for hyperlinks – something that has far-reaching consequences for use of the internet in Canada.

Related Reading:

Can you be anonymous online in Canada?

Is a Website Operator Liable for User Comments?

Defamation Update: Hyperlink Is Not Publication

Online Defamation Update: Doctrine of “presumed publication”

Calgary – 10:00 MST

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