Archive for May, 2016

Android vs. Java: Copyright Update

By Richard Stobbe

In a sprawling,  billion-dollar lawsuit that started in 2010, a jury yesterday returned a verdict in favour of Google, delivering a blow to Oracle.  (For those who have lost the thread of this story, see : API Copyright Update: Oracle wins this round).

oracle_jury_verdict

The essence of Oracle America Inc. v. Google Inc. is a claim by Oracle that Google’s Android operating system copied a number of APIs from Oracle’s Java code, and this copying constituted copyright infringement. Infringement, Oracle argued, that should give rise to damages based on Google’s use of Android. Now think for a minute of the profits that Google might attribute to its use of Android, which has dominated mobile operating system since its introduction in 2007. Oracle claimed damages of almost $10 billion.

In prior decisions, the US Federal Court decided that Google’s copying did infringe Oracle’s copyright. The central issue in this phase was whether Google could sustain a ‘fair use’ defense to that infringement. Yesterday, the jury sided with Google, deciding that Google’s use of the copied code constituted ‘fair use’, effectively quashing Oracle’s damages claim.

Oracle reportedly vowed to appeal.

 

Calgary – 10:00 MST

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Liability of Cloud-Based Service Provider For Data Breach

By Richard Stobbe

Silverpop Systems provides digital marketing services through a cloud-based tool called ‘Engage’. Leading Market Technologies, Inc. (“LMT”) engaged Silverpop through a service agreement and during the course of that agreement LMT uploaded digital advertising content and recipient e-mail addresses to the Engage system.  A trove of nearly half a million e-mail addresses, provided by LMT, was stored on the Engage online system. In November 2010, Silverpop’s system was hacked, putting LMT’s email list at risk. Silverpop notified LMT of the data breach.  After LMT refused to pay for further service, Silverpop suspended the agreement.

Litigation commenced in 2012, with LMT claiming damages for breach of contract and negligence based on Silverpop’s failure to keep the email list secure. Should the service provider be liable? Silverpop argued that it was engaged to provide access to its online system, not specifically to keep data secure. Thus there was no breach of its obligations under the agreement. And anyway, if LMT suffered any damages, they were indirect or consequential and consequential such damages were excluded under the terms of the agreement. LMT countered that, in fact, the agreement quite clearly contained a confidentiality clause, and that the damages suffered by LMT were direct damages, not indirect consequential damages.

The US Federal Circuit Court of Appeals in Silverpop Systems Inc. v. Leading Market Technologies Inc. sided with Silverpop:

  • “Here, the parties’ agreement was not one for the safeguarding of the LMT List. Rather, the parties contracted for the providing of e-mail marketing services. While it was necessary for LMT to provide a list of intended recipients (represented as e-mail addresses on the LMT List) to ensure that the service Silverpop provided (targeted e-mail marketing) was carried out, the safe storage of the list was not the purpose of the agreement between the parties.” (Emphasis added)

The court was careful to review both the limit of liability clause (which provided an overall cap on liability to 12 months fees), and the exclusion clause (which barred recovery for indirect or consequential damages). The overall limit of liability had an exception: the cap did not apply to a breach of the confidentiality obligation. However, this exception did not impact the scope of the limit on indirect or consequential damages.  Since the court decided that the claimed breach did not result from a failure of performance, and the consequential damages clause applied to LMT’s alleged loss. As a result, LMT’s claims were dismissed.

Lessons for business?

  • Those limitation of liability and exclusion clauses are often considered “boilerplate”. But they really do make a difference in the event of a claim. Ensure you have experienced counsel providing advice when negotiating these clauses, from either the customer or service provider perspective.

 

Calgary – 07:00 MST

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Does Copyright Protect Facts?

By Richard Stobbe

A documentary film is, by its nature, a work of non-fiction. It expresses a set of facts, arranged and portrayed in a particular way. If a fictional novel is written, based on a documentary film, is copyright infringed? Put another way, does copyright protect the “facts” in the documentary?

In the recent Federal Court decision in Maltz v. Witterick, the court considered a claim of copyright and moral rights infringement by the makers of a documentary entitled No. 4, Street of Our Lady about the Hamalajowa family, a real-life family  who harboured and saved three Jewish families during the Second World War in Poland.  A writer, inspired by the documentary, wrote a fictional young adult novel based on the same real-life experiences of the Hamalajowa family, even going so far as to use many of the same names, the same storyline and facts. The book, entitled My Mother’s Secret, was published by Penguin Canada and went on to become a modest success.

After hearing of the book, the filmmakers sued both the author and Penguin Canada for infringement of their copyright in the documentary film. Although there was no verbatim copying of the dialogue or narrative, the filmmakers claimed that their copyright was infringed in the overall themes, relying on the interesting case of Cinar Corporation v. Robinson, which stands for the proposition that the cumulative features of a work must be considered, and that for the purposes of copyright a “substantial taking” can include similarities such as themes. The filmmakers also argued that a distinction must be drawn between “big facts” and “small facts”. For example, a “big fact” that Polish Jews were captured and deported to concentration camps is not deserving of copyright protection, whereas a “small fact” that a particular Jewish family was taken away from a particular place on a specific day – this kind of fact is deserving of protection, and it was this type of information that was copied by the author from the documentary film without permission.

The court rejected this notion. “The Applicants’ arguments based on differences between “small” and “large” facts, with the former deserving of protection in this case and the latter not so deserving, are without merit. Copyright law recognizes no such difference or distinction. Facts are facts; and no one owns copyright in them no matter what their relative size or significance.” (Emphasis added)

The Court also made an important clarification regarding characters in the story. Citing the Anne of Green Gables decision, the filmakers claimed infringement of the “well-delineated characters” in the film, including the members of the Hamalajowa family. They argued that “the characters in the Book are clearly based on and are virtually identical to the individuals in the Documentary.” This analysis is misguided, according to the Court. “[T]here are no fictional characters in the Documentary; there are only real people or references to and recollections of once real persons, and there cannot be copyright over a real person, whether dead or alive.” (Emphasis added)

The copyright and moral rights claims were dismissed. The important message that is reinforced by this fascinating decision is that the only copyright in the filmmakers’ story lies in their expression of that story and not in its facts.

 

Calgary – 07:00 MST

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IP Infringement Claim Against Canadian Company Stays in U.S.

 

By Richard Stobbe

Where should a lawsuit be heard? Canada? The US? In other posts we discuss the idea of a “choice of law” and “forum selection” clauses in contracts. In those cases, the parties agree to a particular forum in advance.

What if there is no contractual relationship? There’s just an intellectual property infringement claim. What is the proper forum for that dispute to be heard?

In Halo Creative v. Comptoir Des Indes Inc., David Ouaknine, Case No. 15-1375 (Fed. Cir., Mar. 14, 2016), a recent decision out of the US Federal Circuit Court of Appeals, this issue was reviewed.

Halo Creative, a Hong Kong based furniture maker, launched an IP infringement lawsuit against Comptoir Des Indes, Inc., a Canadian company, and its CEO, claiming infringement of Halo’s U.S. design patents, U.S. copyrights, and one U.S. common law trademark. The lawsuit was filed in the Northern District of Illinois. The Canadian company moved to dismiss the lawsuit based on a “forum non conveniens” argument – essentially an argument that the Federal Court of Canada would be a better place to litigate the claims. The Illinois district court agreed with the Canadians and dismissed the case. Halo appealed.  At the appeal level, the court looked at the adequacy of the Canadian court to litigate this issue.

The Federal Court of Canada was certainly an available forum but there was no evidence that Halo could seek a satisfactory remedy there, since the infringing activity took place in the U.S., and the infringed rights were all based on U.S. registrations or U.S. based trademark rights. IP rights are fundamentally territorial.  The U.S. court even quoted a Canadian textbook: “a Canadian court would not have jurisdiction to entertain in an action brought by an author of a work in respect of acts being committed outside Canada, even if the defendant was within Canada.” (Emphasis added)  Here, there was no evidence that any infringement occurred in Canada.

The motion was dismissed and the lawsuit will proceed in the U.S.

Calgary – 07:00 MST

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Social Media Defamation: the #creeper decision

By Richard Stobbe

A dispute between suburban neighbours escalated and spilled over into social media when one of the neighbours vented on Facebook. The Facebook posts suggested that the plaintiff was a “nutter” and a “creep” who deployed a system of cameras and mirrors to keep the defendant’s backyard and young children under 24-hour surveillance. There was no evidence of any such system. Once the initial comments were posted, they were widely disseminated among the defendant’s 2,000 Facebook “friends” and potentially viewed by any Facebook users due to the “public” settings on the defendant’s Facebook account.

This in turn prompted other comments from the defendant’s Facebook “friends” such as a “pedo”, “#creeper”, “nutter”, “freak” (and more). After about 27 hours, the posts were deleted from the defendant’s account, but by then the same posts had propagated through other Facebook pages ; the court noted dryly that “The phrase ‘gone viral’ would seem to be an apt description.”

The plaintiff, a middle school teacher, was obviously concerned that the posts, as published, could cause him among other things to lose his job or face disciplinary action at his place of employment.

In Pritchard v. Van Nes, 2016 BCSC 686 (CanLII), the court noted that the social media posts constituted attacks on the plaintiff’s character which “were completely false and unjustified. [The plaintiff] has, as a consequence of the defendant’s thoughtless, reckless actions, suffered serious damage to his reputation, and for the reasons set out herein he is entitled to a substantial award of damages.”

The court awarded general damages for defamation of $50,000 and additional punitive damages of $15,000, plus costs.

(See our Defamation Archive)

Calgary – 07:00 MST

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