Archive for February, 2016

CASL Enforcement (Part 1)

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By Richard Stobbe

Since July 1, 2014, Canada’s Anti-Spam Law (or CASL) has been in effect, and the software-related rules have been in force since January 15, 2015.

With the benefit of hindsight, we can see a few patterns emerge from the efforts by the enforcement trifecta: the Privacy Commissioner of Canada, the CRTC and the Competition Bureau. (For background, see our earlier posts) What follows is a round-up of some of the most interesting and instructive enforcement actions:

  • March 2015 – A notice of violation was issued by the Competition Bureau to 3510395 Canada Inc. (dba Compu.Finder) with an accompanying administrative monetary penalty of $1,100,000 for sending commercial electronic messages without the consent and for commercial electronic messages which contained an ineffective unsubscribe mechanism in violation of CASL.
  • March 2015 – A penalty of $48,000 was levied against Plentyoffish Media Inc. as part of an undertaking concerning an alleged CASL violation related to an unsubscribe mechanism that was not set out “clearly and prominently” and was not able to be “readily performed”.
  • March 2015 – The Competition Bureau commenced action against Avis Budget Group Inc. for deceptive marketing practices, seeking $30 million in administrative monetary penalties from the companies, and refunds for consumers. The Bureau took action under CASL since Avis and Budget used electronic messages to disseminate the alleged false or misleading representations.
  • June 2015 – Porter Airlines Inc. paid $150,000 as part of an undertaking concerning certain CASL violations that were very similar to those which caught Plentyoffish. The Porter allegations related to commercial electronic messages that contained an unsubscribe mechanism that was not set out “clearly and prominently”, or that were missing an unsubscribe mechanism.
  • November 2015 – Similarly, Rogers Media paid $200,000 as part of a CASL investigation into commercial electronic messages that either contained an unsubscribe mechanism that was not able to be “readily performed”, that did not enable the person to indicate their wish to no longer receive messages or that did not provide an electronic address for the purposes of unsubscribing that was valid for a period of 60 days after the message was sent.
  • This certainly points to the more technical risks of poorly implemented unsubscribe features, rather than underlying gaps in consent. Perhaps this is because heavy enforcement action related directly to consent is still to come. Implied consent can be relied upon during a three-year transitional period. After that window closes, expect enforcement to focus on failures of consent.

    To put this all in perspective, consider enforcement of other laws within the CRTC mandate: in 2014 the CRTC did not issue any notices of violation of CASL, but issued 10 notices of violation related to the Unsolicited Telecommunications Rules and the National Do Not Call List (DNCL); in 2015 the CRTC issued 1 notice of violation of CASL and about 20 related to the Do Not Call List.

    Calgary – 07:00 MT

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    The IP Dimensions of 3D Printing: a recent decision

    By Richard Stobbe

    align-capture.PNGThere has been much speculation about the impact of 3D printing on the enforcement of IP rights. But very few decisions. Now, finally, a case you can sink your teeth into: ClearCorrect v. ITC, 2014-1527 deals squarely with a patent infringement allegation which focuses on 3D-printing technology.

    This case relates to the production of orthodontic appliances known as teeth aligners. According to patents owned by Align Technology, their aligners “are configured to be placed successively on the patient’s teeth and to incrementally reposition the teeth from an initial tooth arrangement, through a plurality of intermediate tooth arrangements, and to a final tooth arrangement…” as listed in the ’880 patent. (As soon as you see the word “plurality”, you just know you’re reading a good patent.)

    ClearCorrect, a competitor of Align Technology, produced aligners by means of 3D-printed digital models of aligners. ClearCorrect electronically transmitted digital files to its subsidiary ClearCorrect Pakistan (thus skirting the US patent rights) where digital models of the aligners were created and configured. ClearCorrect Pakistan then electronically transmitted these digital models back to ClearCorrect US, where the digital models were 3D-printed into physical models. From there, aligners were manufactured using the physical models.

    The patent owner alleged that the transmission of these digital three-dimensional models should be stopped at the border, just like any infringing “article” would be stopped. Typically, an owner of US patent rights can employ the resources of the ITC to stop and seize articles – take for example, a piece of equipment or a consumer product – which infringes a US patent. This prevents the infringing articles from being imported into the US, even if they are manufactured overseas. In this case, the court had to decide if digital three-dimensional files constituted “articles” for these purposes.

    In the end, the court considered articles to be “material things” and decided that the 3D-printable digital files were not “articles”. Thus, the ITC lacked jurisdiction to prevent the entry of these files into the US. (Exactly how it could prevent the transmission of the files is another matter entirely.)

    Something to chew on while we wait to see if the decision will be appealed.

    Calgary – 07:00 MT

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    Copyright Act confers no rights upon animals

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    By Richard Stobbe

    Naruto the monkey must abandon his budding photography career and go back to using his opposable thumbs towards some other end. To bring the monkey-selfie case to a close, the US District Court outlined its careful reasoning for rejecting the copyright claims of Naruto, a six-year-old crested macaque. (If you missed the background story, see our earlier post.)

    The decision in Naruto v. Slater (US District Court No. Calif. Case 15-cv-04324-WHO) is, if nothing else, a study in restraint. The judge reviews cases involving other non-human claimants, such as the 2004 decision dealing with a claim advanced on behalf of the world’s whales, porpoises, and dolphins, regarding violations of the US Endangered Species Act.

    In its final analysis, the court concluded: “Naruto is not an ‘author’ within the meaning of the Copyright Act. Next Friends argue that this result is ‘antithetical’ to the ‘tremendous [public] interest in animal art.’ Perhaps. But that is an argument that should be made to Congress and the President, not to me. The issue for me is whether Next Friends have demonstrated that the Copyright Act confers standing upon Naruto. In light of the plain language of the Copyright Act, past judicial interpretations of the Act’s authorship requirement, and guidance from the Copyright Office, they have not.”

    Calgary – 07:00 MT

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    What does it mean to circumvent a “Technological Protection Measure”?

    By Richard Stobbe

    Copyright attempts to balance the rights of authors with the rights of users. It’s this tension – copyrights vs. user rights – that makes copyright so fascinating (…to some people).

    In 2012, Parliament enacted some changes to Canadian copyright law, which included a number of so-called “user rights” or exceptions to infringement, some of which were conditional on rules dealing with the circumvention of technological protection measures. I’ll give you an example: under section 29.23, recording a TV program for time shifting on your PVR is not an infringement of copyright as long as you did not circumvent a technological protection measure (or “TPM”). So circumvention of a TPM can take you outside the benefit of the exception, with the result that the recording would constitute an infringement.

    No court has had a chance to review the rules around TPMs… until the decision in 1395804 Ontario Limited (Blacklock’s Reporter) v Canadian Vintners Association (CVA), 2015 CanLII 65885 (ON SCSM), an Ontario decision which interprets circumvention of a TPM.

    A “technological protection measure” is, according to the Copyright Act any “effective technology, device or component” that controls access to a work and whose use is authorized by the copyright owner. It is deliberately broad. The Blacklock’s case dealt with a subscription-based online newsletter published by Blacklock’s. When their CEO was mentioned in a Blacklock’s article, the CVA bypassed the subscriber paywall to access the article. Did the CVA hack into the system and then scrape and republish the Blacklock’s content? No (although such conduct might have justified the $13,000 in copyright infringement damages that were awarded by the judge). The CVA obtained a copy of the article via email, from a colleague who did have a subscription.

    According to this case, circumventing a technological protection measure includes obtaining a copy of an article by email, where the article sits behind a paywall. The good news is that no hacking skills are required!

    Since this case will not be appealed, it stands as the leading case, although it has been called controversial, bizarre and an extraordinary misreading of copyright law. Since it is the decision of an Ontario small-claims court, it is not binding on other courts in Canada. And since Blacklock’s is pursuing copyright infringement claims against others – there are 10 claims currently filed in the Federal Court – this issue should be canvassed at the Federal Court where further clarification may emerge. Stay tuned.

    Calgary – 07:00 MT

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    Wait… Did you say jail time for trademark infringement?

    By Richard Stobbe

    Imprisonment in intellectual property infringement cases is rare – although not unheard of. The message from a recent Canadian Federal Court decision is… don’t mess with the Court. They expect compliance with their orders and a contempt order can lead to a “warrant of committal”, resulting in imprisonment.

    In 2013, a Federal Court ruled that Hightimes Smokeshop and its officer and director, Ameen Muhammad had infringed the “HIGH TIMES” trademark owned by Trans-High Corporation (See: Trans-High Corporation v Hightimes Smokeshop and Gifts Inc., 2013 FC 1190 (CanLII)). In spite of this judgment, the judgement was ignored, and trademark infringement continued on the shop signage, sales receipts and printed materials of Hightimes Smokeshop.

    Then in June 2015, Hightimes Smokeshop and Mr. Muhammad each pleaded guilty to five counts of contempt which resulted in the issuance of a Contempt Order, and an award of $62,500 in costs, payable by Hightimes Smokeshop and Mr. Muhammad, jointly and severally. However, that Contempt Order was also ignored and no money was paid to Trans-High Corporation.

    In Trans-High Corporation v. Hightimes Smokeshop and Gifts Inc., 2015 FC 1104 (CanLII), Trans-High Corporation brought another motion to compel compliance with the Contempt Order, citing a ruling by the Supreme Court of Canada, that a person who is ordered by a court to pay money may be imprisoned for contempt if he or she shows “a certain degree of intention to evade his or her obligations”; or, put another way “he or she is unwilling to pay the debt despite having the ability to pay” (see paragraph 11).

    The Court issued a warrant for the arrest and imprisonment of Mr. Muhammad, arising from contempt in a trademark infringement case.

    Calgary – 07:00 MT

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