2009 was a fascinating year in the world of intellectual property and internet law. Here are a few issues to watch in 2010:

Olympic Marks:  The next few months will focus attention on the uses and abuses of both Olympic marks, as well as the Olympic and Paralympic Marks Act. 

Canadian Copyright Reform and Anti-Spam Law: The Canadian copyright reform process has stalled yet again. The government undertook a public consultation process in the fall but any prospect of movement on this issue has again died in the wake of Parliament’s prorogation.  This also applies to proposed anti-spam legislation that died on the order paper. Political pundits are speculating about a fall 2010 election, and if that happens, we won’t see any developments in copyright reform or anti-spam laws until 2011 at the earliest.

US Patent Reform: As we predicted in IP & Internet Law in 2009, a proposed patent reform bill was introduced early in 2009, but since then, the patent reform process in the US is stalled. House and Senate bills are inching through Congress.

The Development of App Law: The surprise of 2009 was the rapid development of app law – the law of mobile applications. This trend can be expected to continue as legal disputes help clarify the law in this growing area.

Copyright Class Action: Though this lawsuit was commenced in 2008, it has the potential to become headline news in 2010 if it proceeds through the courts – it’s the ghost of Chet Baker vs the Recording Industry in a copyright claim for unpaid royalties (see: Canadian Copyright Class Action… Against the Recording Industry).

Business Method Patents: In both Canada and the US, the patentability of business methods is being contested, and a decision in the Bilski case (in the US), as well as an appeal of the rejection of the Amazon 1-click patent (in Canada) should come in 2010.  We can finally expect to get some clarity in this area.

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On Tuesday, Microsoft lost at the U.S. federal court of appeals in a landmark case that will force the software maker to redesign its flagship word-processing program. The US appeal court upheld a $290-million US judgment against Microsoft in the patent battle launched by Canadian company i4i Inc.  The injunction comes into effect in January to stop sales of Microsoft Word software which infringes i4i’s software patent for XML editing. Microsoft claims it is reviewing its legal options.

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Way back in 1998 – almost prehistoric when it comes to technology – a US inventor registered a design patent for “Computer display with an iPhone window” in a prescient move that saw a device with email, telephone, internet services all arranged by handy icons in a rectangular screen called an “iPhone”.  Sound familiar?  Check it out.

The inventor, Joseph Giordano, sold the invention to InfoGear Technology Corp., which was acquired by Cisco in 2000, and Cisco famously locked horns with Apple in January 2007 when Apple’s iPhone was launched.  The rest, of course, is history.  The good news is that if someone on your gift list is clamouring for an iPhone, you can always get them one of these if you can’t afford the latest 3GS.

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The irony of this one won’t be lost on consumers.  After years of lecturing and lawsuits by the recording industry about the sins of copyright infringement, the tables are turned in this class-action lawsuit. 

The estate of jazz musician Chet Baker has sued the major record labels – Sony BMG Music, EMI Music, Universal and Warner Music – for copyright infringement claims that, if proven, may add up to significant damages. [Link to story and PDF of the claim] The claim alleges that the record industry has a backlog list of hundreds of thousands of songs which were published but for which copyright royalties were never negotiated or paid.  Using the metrics of statutory damages, each instance of infringement may attract a flat $20,000 liability for the recording industry, which means 300,000 songs create a potential $6 billion damage award.

This one will be closely watched in 2010.

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A few trade-mark stories are worth noting:  Trade-mark Opposition is a process where one brand owner can oppose the trade-mark application of another. Take these two recent examples which illustrate why you need good advice when arguing your case before the Trade-marks Opposition Board (TMOB):

• PIZZA SPOT vs WHITE SPOT: the owners of the well-known White Spot chain of restaurants opposed the application for the mark PIZZA SPOT for restaurant services, citing its family of 17 registered WHITE SPOT marks; the TMOB decided that PIZZA SPOT would not be confusing with WHITE SPOT for identical services; there is a low degree of distinctiveness for the word SPOT, and so the mark PIZZA SPOT was permitted to proceed (White Spot Limited v. Mazzaruss Inc., 76 C.P.R. (4th) 385 (T.M.O.B.));
• SEA MILES vs AIR MILES: what appears to be a similar case resulted in the opposite conclusion. The owners of the AIR MILES brand challenged the application for the trade-mark SEA MILES for identical services (travel rewards programs). The AIR MILES owner cited its family of 27 registered AIR MILES marks.  The TMOB concluded there is a high degree of resemblance between the marks, and refused the application for SEA MILES (Air Miles International Trading B.V. v. Sea Miles LLC, 76 C.P.R. (4th) 369 (T.M.O.B.)).

Why the difference? In making their arguments, AIR MILES submitted substantial evidence of use and advertising, and built up their case for their family of “MILES” marks.  In the WHITE SPOT case, the evidence wasn’t clear that there was a family of “SPOT” marks, though evidence was tendered to support the use and advertising of the WHITE SPOT mark.    

An update to our post on the The Great Olympic Sweater Debate: the Cowichan Tribes have reached a settlement with VANOC in a licensing deal that permits sales of genuine Cowichan sweaters in Vancouver alongside the Olympic brand. Although the Cowichan band likely did not have an arguable case under intellectual property law, they did have a good argument in the court of public relations.  A quick resolution attests to VANOC’s desire to avoid negative headlines in the run-up to the games. 

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The US Patent and Trademark Office (USPTO) has announced a pilot project to provide accelerated examination of certain clean technology (cleantech) patent applications. The program is aimed at “green technology” though so far there are no details on what inventions will qualify. The current wait-time for a patent application is roughly 2.5 years just to get to a first office action, and over 3 years to obtain a final decision.

Now that the US has joined the UK, South Korea and Australia, the question of Canada’s response becomes more pressing. When will Canada adopt a fast track for cleantech patents?

Click here for the PDF of: Tips and Trends in CleanTech Licensing.

Related Reading: More CleanTech articles on ipblog.ca 

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An organization has collected a wealth of online data including names, addresses, prices, photos, specifications, geo-location data, text, links and more.  Can you access their system, scrape the data and then repackage it for your own business?

In this case, the answer is no. An Ontario court has again shut down a data-mining operation in Toronto, where real estate broker Fraser Beach attempted to scrape and redisplay MLS data. The court dismissed Mr. Beach’s request to open up the MLS data.

The latest decision follows a similar battle in 2007, where an Ontario company (operated by the same realtor) asked the court to compel MLS to share its data. In Realtysellers (Ontario) Limited v. Toronto Real Estate Board, 2007 CanLII 50283 (ON S.C.), the court turned down this request, citing the MLS “Authorized User Agreement” which prohibits the kind of wholesale, unrestricted data mining that was the cause of the dispute.  The terms of the user agreement were instrumental in the court’s decision in both cases.

Get advice on how to protect your online data through the use of copyright and properly drafted online access agreements.

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Earlier this year, iPhone app developer Zynga Game Network Inc. sued rival game-maker Playdom Inc. and a number of ex-employees in California state court. Among the causes of action were: misappropriation of trade secrets, breach of contract, breach of the duty of loyalty, tortious interference with contracts and unfair competition. Zynga alleges that Playdom hired away four key employees who allegedly took with them key information and planning documents when they left Zynga, including “The Zynga Playbook”, a document which would contain valuable trade secret information in the fiercely competitive app industry. The court granted an initial request for a temporary restraining order against Playdom and the other defendants. Those defendants are prohibited from destroying any of the files allegedly misappropriated. (To see the court documents, link here.)

Under Canadian law, the misappropriation of trade secrets has been scrutinized in several high-profile cases, including the RBC v. Merrill Lynch case, where virtually all of the investment advisors at an RBC branch joined competitor Merrill Lynch.  The law is clear that departing employees owe a duty of “good faith” to their employer, and can also owe a  “fiduciary” duty – a special category which applies to employees such as senior managers, executives, directors and officers.  In the RBC case, the departing employees were not fiduciaries, and had the legal right to leave RBC and to compete with their former employer. But note that employees owing a fiduciary duty will be held to a higher standard.

The lessons for business? Ensure your standard employment agreements contain appropriate non-competition and confidentiality clauses to prevent unfair competition and improper use of confidential information.
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Canadian patent examiners will now be assessing patent applications under a new guideline which applies a four-part test on obviousness.  This flows from the 2008 Supreme Court of Canada decision in Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61. The following test is being applied pursuant to CIPO’s new Practice Notice on Obviousness – November 2, 2009:

1. Who is the “person skilled in the art” and what is the relevant common general knowledge of that person?
2. What is the inventive concept of the claim contained in the application?
3. What difference, if any, exists between the prior art and the inventive concept contained in the application?
4. Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?

Related reading: SCC Decision on Selection Patents

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Richard Stobbe’s article “Tips and Trends in CleanTech Licensing“  is published in this week’s edition of the Lawyer’s Weekly (Vol. 29, No. 28; November 27, 2009).  It discusses the issues of:

• pre-license preparation;
• licensing;
• improvements and enhancements;
• the regulatory environment; and
• patents and litigation.

Click here for the PDF version.

Richard is a member of the LES Clean Tech Committee, High Tech Sector and is currently the Chair of the Calgary Chapter of Licensing Executives Society. 

Related Reading: the Lawyer’s Weekly site.  

Calgary – 11:00 MST

In a story that reads like a law-school exam, a company with a German trade-mark took a California man to arbitration to try and win the domain name project.me, which is registered under the rules for the country code top-level domain for Montenegro.  iPhone app developer Project.me (the German company) recently lost at arbitration before the World Intellectual Property Office Arbitration and Mediation Centre.  The decision project.me GmbH v. Alan Lin Case No. DME2009-0008 is noteworthy for several reasons:

1. The German company failed primarily because the domain name in question was applied for before the company was incorporated or the trade-mark was applied for. The California registrant who initially registered the domain name couldn’t have registered it to take advantage of the German company’s brand, since the German company didn’t exist at the time.

2. Domain name arbitration decisions typically ignore the suffix (.com, .ca or in this case .me) but this decision notes that “a determination of identicalness and similarity of a .me domain name may in appropriate cases be based on a consideration of the domain name as a whole – that is, of the domain name including the “.me” suffix.”  Future domain name disputes may take this reasoning into account.

3. This case illustrates the international nature of intellectual property disputes and shows why it’s important to get advice on trade-marks, branding, and domain name strategies.

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We’re launching applaw.ca.â„¢

Businessweek’s recent article “Inside the App Economy“ shows that mobile applications are evolving from a geek-niche to a powerful industry sector. Not convinced? Consider the case of Zynga, a US app developer that has gone from zero to $100 million in revenues in just 2 years. Canadian app developers are also ringing up sales through the iTunes store.  Fortunes are being made 99¢ at a time. As more platforms, smartphones and mobile devices come on-stream - including BlackBerry, Palm, Android, Google, Yahoo, Facebook - the industry will continue to grow.

This brings us to the emerging body of “app law” that is being articulated by the courts, as developers jostle for position in the marketplace. Richard Stobbe will be presenting to the Vancouver iPhone Forum on November 24th on the subject of app law and intellectual property issues in Canada.  Bookmark applaw.caâ„¢ on your iPhone, BlackBerry, Palm or other mobile device for continuing updates in this field.

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In a recent US lawsuit Tricome v. eBay, Inc., 2009 WL 3365873 (E.D.Pa. Oct 19, 2009), a user sued eBay in Pennsylvania and eBay invoked the “forum selection clause” in its online agreement.  That clause specifies that disputes under the agreement have to be brought in California, eBay’s home turf.

The court decided that the clause was not shocking or unreasonable, the user had a choice of other service providers and was not forced into this agreement, and eBay did not use any “high pressure tactics” to get the user to agree. The court also recognized that eBay, as an international business, has a legitimate interest in controlling where it will litigate disputes. 

In Canada, there is also a growing line of cases establishing that “forum selection clauses” will be upheld. For example, see: Wembley Marketing Ltd. v. Itex Corporation, 2008 CanLII 67425 (ON S.C.), a recent Ontario decision.  This provides additional comfort for online retailers, licensors and service providers that such clauses in online user agreements will be upheld when they are well-drafted.

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There is no shortage of intellectual property stories in the media. What used to be a “special interest” story is now mainstream news. Here are a few recent stories worth noting:

• The Globe and Mail^® has posted a podcast on How to protect your intellectual property from the Canadian entrepreneurs at i4i who locked horns with Microsoft. They discuss the lessons learned. (Related post: Canadian Company Shuts Down Microsoft Word)

• BusinessWeek^® Magazine has a story on Intellectual property protection in China.  Intellectual property rights protection is a hard-fought battle in China, but western companies see Chinese domestic disputes as a catalyst for better enforcement.  

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ICANN announced on Friday that it has approved – in principle – the creation of domain names made up of non-Latin characters. The protocols that run today’s internet recognize domain names and internet addresses made up of numbers and A-to-Z Latin characters. ICANN’s “Fast Track Process” will launch on November 16, 2009, permitting countries to apply for non-Latin domain names: think Korean, Chinese, Arabic and Hindi. Once the technical wrinkles are ironed-out (and web-browsers catch up), the new internationalized domain names will be implemented, and registries will start accepting registrations.

For Canadian businesses, this development is worth watching, as it presents an opportunity to carve out a local presence in overseas markets.  

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The battle over patentability of software and business-methods is continuing in both Canada and the US.  In the US, the Bilski case and its “machine-or-transformation” test is currently undergoing review at the Supreme Court level. Earlier this month the Free Software Foundation (FSF) and Red Hat each submitted amicus curiae briefs in support of the proposition that software is not patentable.  Briefs have been filed by Yahoo, IBM, the Business Software Alliance and dozens of others.  A decision is expected sometime in 2010.

In Canada, the Commissioner of Patents refused Amazon’s Patent Application No. 2,246,933 covering Amazon’s so-called “one-click” e-commerce patent.  Amazon is now appealling to the Federal Court.  This case will be closely watched to clarify the Canadian position on patentability of software and business-method patents.

Related Reading: Update: Business Method Patents , and USPTO Publishes Interim Guidelines for Subject Matter Eligibility

Calgary 11:45 MST

 

Four key employees of a software company resign and start up a competing venture.  The former employer stumbles. The new company aggressively targets the customers of the former employer, and develops into a successful and profitable business, twice the size of the former employer.

On the surface, that’s the story of GasTOPS Ltd. and MxI, a story spanning 13 years, leading to an epic lawsuit (295 days of trial… that’s like going to trial 5 days a week every day for over a year). Last month, when the Ontario court handed down its 675-page decision, the former employees who left GasTOPS and started MxI were hit with an $11 million damage award, for usurping corporate opportunities, and misappropriating trade secrets, confidential information and intellectual property of the former employer.  The decision [3.7 MB PDF] covers the issues in great detail and if you can wade through the analysis, it’s a great survey of current case-law in this area.

The take-home message: departing executives owe a continuing fiduciary duty to their former employer, not to use confidential information or poach business opportunities. In this case, the judge said that duty should continue for 10 years after employment ends.

Related Reading: Departing Employees & Trade Secrets

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Aside from disputes over beer labels, you can’t get much more Canadian than this one.  When the Bay unveiled its line-up of Olympic gear last week, the knit sweater (pictured at left) attracted the attention of the Cowichan Band Council, who cried foul . The sweater, they complained, is a rip-off of the traditional Cowichan sweater which has been knitted by the Vancouver Island band for generations and has become something of a Canadian icon.  The Bay argued that theirs wasn’t a Cowichan knock-off, but was merely inspired by the design style. 

So, does the Band Council have a case for trade-mark infringement?  Probably not. The Band does indeed have several registered trade-marks, not for the design of the sweater, but for the words GENUINE COWICHAN, and the logo at right.  The design of the sweater itself is likely not protectable – there are countless variations of the design, even among genuine products.  As long as the Bay does not sell its sweaters with the words GENUINE COWICHAN or that logo, then it likely won’t infringe the Band’s marks.

Calgary – 10:45 MST

Can a video game portray a character that looks like you, without your permission? There have been a number of disputes over the right of video-game publishers to use a person’s likeness – for example, the dispute over Kurt Cobain’s avatar in Guitar Hero 5, or the recent lawsuit over whether the images of certain professional boxers can be used in a video game. 

In a recent US case (Brown v. Electronic Arts Inc., Case No. 2:09-cv-01598 (US District Court, Central Cal.)), retired football player Jim Brown sued Vancouver-based EA over its use of his likeness in the popular Madden NFL game. This isn’t the first lawsuit over the use of football players’ images – last year, a group of players successfully sued the National Football League Players Association for claims arising out of royalty rates for the use of players’ images in EA games.  In the Brown decision however, the court rejected Brown’s complaint. 

In the US, video games are a form of protected expression qualifying for a free-speech defense, and EA made a successful free speech defense to this claim. 

The case turned in part on the fact that the character in the game was one of thousands of “virtual athletes”.  This particular character may have outwardly resembled Brown to football fans (they would have recognized his jersey number and designation as a running back), but Brown’s name was not used in the game or in advertising. If EA had made any of these mistakes – using his name or likeness in advertising – then they likely would have been tripped up by Brown’s Lanham Act complaint. This claim is based on the idea that an advertiser can’t falsely claim that a celebrity has somehow sponsored or endorsed their product.  EA did not attempt to signify that Brown endorsed the games, so EA did not get tackled by the Lanham Act claim.

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Where an infringer carries on with the infringing activity after the copyright owner has sent notice, damages can be higher.  This is the finding of a Federal Court judge in Microsoft Corporation v. 1276916 Ontario Ltd. (2009 FC 849)(Sept. 17, 2009).  In that case, Smart Buy, a computer retailer in Ontario, was selling PCs loaded with pirated copies of Microsoft software.  Smart Buy continued its infringing activities not only after warnings from Microsoft, but even after the lawsuit commenced in Court.  The court awarded statutory damages of $80,000 and punitive damages of $50,000.  The individual business owner was found personally liable.

Other recent copyright infringement cases have resulted in similar damage awards in Canada:

a)        $200,000 in punitive damages, $100,000 statutory damages against the individual defendant and $100,000 against the corporate defendants (Microsoft v. 9038-3746 Quebec Inc.)

b)        $100,000 in punitive damages and statutory damages of $20,000 per infringement (Louis Vuitton Malletier S.A. v. Yang)

c)        $300,000 in punitive damages comprised $200,000 against the individual business owner, and $100,000 against the other defendants (Louis Vuitton Malletier S.A. v. 486353, B.C. Ltd.)

d)        $50,000 in punitive damages against all of the defendants jointly and severally (Microsoft v. PC Village Co. Ltd.)

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