Archive for November, 2012

App Law in China

We recently flagged the regulatory risks faced by app developers in Canada and the US. China also presents certain unique challenges for app developers (and Apple itself), as shown by these examples:

  • The Encyclopedia of China Publishing House successfully sued Apple Inc for copyright infringement arising out of a Chinese encyclopedia app for iPhone and iPad. A court in Beijing reportedly ordered Apple to pay $80,250 in compensation to the publisher, whose work was allegedly copied by the app developer;
  • Apple has also reportedly faced patent infringement allegations in China over its FaceTime app. A Taiwanese inventor claims that the app violates his patent rights in an earlier invention.
  • Siri is not exactly an app, but recent complaints about Siri in China illustrate the public relations risks associated with apps in China. Concerns have been raised about Siri providing links to “prostitution places”…. as though a person couldn’t search and find offensive materials on a iPhone or iPad without the aid of Siri. Technology permits people to access all sorts of unsavoury sites online, but these complaints suggest that Siri should engage in some self-censorship to avoid offending users who ask it to search for offensive material.
  • This recent article highlights the trade-mark issues for Windows 8 app developers whose popular Windows 7 app names are being reserved by others in China, forcing them to negotiate with the squatters or go through the lengthy process of obtaining registered trade-mark rights in China. Microsoft is reportedly working on a policy to address app name disputes.

The usual array of issues faces app developers in China – including potential trade-mark, copyright and patent disputes. App developers are advised to get advice if their apps are to be directed to the Chinese market.

Calgary – 07:00

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Copyright Infringement & Licensing Pitfalls

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.

Calgary – 07:00 MST

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A Distinctly Canadian Patent Fight

image002.gifAs NHL cancellations are pushed through Nov. 30th, hockey fans must resort to other means of entertainment. Try patent cases.

In Easton Sports Canada Inc. v. Bauer Hockey Corp. , 2011 FCA 83 (CanLII), the court reviewed allegations that Easton infringed Bauer’s Patent No. 2302935 (the ‘953 Patent). The ‘953 Patent was originally granted on November 20, 2001 and expires on September 4, 2018. One of the issues on appeal was whether the invention was disclosed during on-ice tests of the prototype skate.

A patent is invalid if the invention was disclosed by the inventor more than one year before the filing date of the patent. In this case, Easton attacked the validity of the ‘593 Patent by arguing that Bauer revealed the invention at a test event – a hockey game between Bauer employees, where the prototype skates were worn. The test event was open to the public and Easton argued that a spectator could have observed the skates and made out the essential elements of the invention. At trial and on appeal, the court rejected this argument.  Although the skates could be observed, they were not available for close inspection or dismantling by spectators, and merely observing the players wearing the skates during a game did not, in this case, “disclose or enable” the invention.

Lessons for business?

  • Disclosure of your invention prior to filing a patent application can be fatal to patentability.
  • Confidentiality agreements can be a useful tool to ensure that invention disclosure is not public – but these agreements should not be seen as a complete one-size-fits-all solution.
  • Any testing of the product – particularly field testing in a location where the public may have access – must be handled very carefully.
  • In Canada and the US, there is a 1-year grace period in which to file a patent application after the first disclosure, but that grace period is not available in all countries, and disclosure result in loss of patent rights in critical overseas markets.

Get advice from experienced patent counsel on patentability and the risks of early disclosure.

Calgary 07:00 MST

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App Law: Regulators Crack Down

Canadian app developers must take care to avoid sanction from regulators both in Canada and in other countries – particularly in the U.S. – when launching apps.

California’s Attorney General recently began notifying  dozens of app developers that they run afoul of the California Online Privacy Protection Act by failing to post their privacy policies. Developers were given 30 days to comply or face fines of up to $2,500 for each download of a non-compliant app. In Canada, federal and provincial privacy laws also mandate the disclosure of privacy policies and the use of a privacy officer, though the legislation is broadly applicable to the private sector and is not targetted specifically at mobile app developers.

Today the Washington Post ran a story about the FTC’s crack down on apps that make “flimsy” claims  about the health effects of certain apps which claim to cure various ills through cellphone sound, light from the screen, or phone vibrations. Some app developers have been hit with fines (see related article below). The FDA is reportedly preparing draft regulations to regulate health claims made in mobile apps.

In Canada, another app developer faced the ire of the CRTC  (the Canadian Radio-television and Telecommunications Commission, Canada’s telecommunications regulator). The CRTC’s objection to the TrapCall mobile app was apparently based on privacy concerns and the protection of subscriber data, though it is likely prompted by pressure from telecos. TrapCall circumvents the paid call-blocking products offered by telcos, and disrupts a revenue stream – after all, who will pay for call-blocking if ubiquitous mobile apps can unblock calls? But it reflects a wider issue regarding technological innovation in the mobile app space that is colliding with established industry practices and (at times) an outdated regulatory environment.

Lessons for app developers?

  • We’ve said it before: Get advice on privacy before you launch your app.
  • Ensure that your claims do not offend regulatory requirements in the countries where your customers reside – whether the requirements are health related, safety regulations, or other advertising /marketing regulations.
  • Well-drafted end-user license agreements (EULAs), privacy policies or terms of use can assist in mitigating risk in this area.

Related Reading: When an iPhone App Makes False Claims

Update: Dec. 3: This is another example of regulatory problems, this time for Uber, a popular, well-financed taxi-summoning app.

Calgary – 07:00 MST

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New Copyright Act Becomes Law… In Part

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In June, the Copyright Modernization Act was passed by Parliament. However, it did not have the force of law yet (See: Copyright Bill Becomes Law). Today, portions of the new copyright law came into force (See: this link). This phased approach is somewhat confusing. The provisions relating to format-shifting, time-shifting, satire, parody – essentially all the provisions directed at education and consumers – are in force.

Those sections dealing with ISPs and the notice-and-notice procedures (subsection 47 [41.25, 41.26, and 41.27(3)]), will be determined through a separate order-in-council process once the regulations are finalized. The provisions which implement certain WIPO treaties (World Intellectual Property Organization Copyright Treaty (WCT) and the World Intellectual Property Organization Performances and Phonograms Treaty (WPPT) are held back, and will come into effect when the treaties are ratified.

I will be speaking tomorrow to the Canadian Bar Association, Technology & IP Subsection, on the subject of copyright updates, and will be reviewing these provisions.

Calgary – 21:00 MST

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Copyright Infringement: On the Negative Side of “Outrageous”

Copying and selling counterfeit software can be a risky proposition if Microsoft, Adobe and Rosetta Stone team up against you.

A Toronto man sold pirated software on Kijiji and Craigslist and three software vendors combined forces to sue him for copyright infringement by way of summary judgment, a truncated procedure that avoids the need for a full trial. Last month, the Canadian Federal Court found that the man’s conduct was “on the negative side” of “outrageous” and “highly unreasonable”. This conduct added $105,000 to the overall damage award of $445,000 for copyright infringement, made up of statutory damages, punitive damages, costs, plus pre- and post-judgment interest. A few interesting points about this decision:

  1. Statutory damages under the Copyright Act range from $500 to $20,000. Here, the judge awarded maximum statutory damages of $20,000 per infringed work.
  2. The court reviewed when punitive damages are appropriate: “when a party’s conduct has been malicious, oppressive and high-handed, offends the court’s sense of decency, and represents a marked departure from ordinary standards of decent behaviour”. In this case, the court was convinced that a significant punitive damage award was warranted.

The case is: Adobe Systems Inc. et al v. Dale Thompson dba Appletree Solutions 2012 FC 1219.

Calgary – 07:00 MDT

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