Toronto Computers Lawyers Group Year In Review (2005-2006)

Toronto Computers Lawyers Group The Year in Review 2005-2006 Barry B. Sookman September 26, 2006 [email protected]

McTet2 #3688343v1

Web Wrap Agreements Dell Computer Corporation c. Union des consommateurs 2005 QCCA 570

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Advertisement of computers at a low price on Dell’s website which proved to be an error.

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The Dell Terms of Sale indicated disputes would be settled by arbitration under the Arbitration Rules of the National Arbitration Forum (“NAF”), accessible by hyperlink from Dell’s website.

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Under Quebec Civil Code Art. 1435. “An external clause referred to in a contract is binding on the parties. In a consumer contract or a contract of adhesion, however, an external clause is null if, at the time of formation of the contract, it was not expressly brought to the attention of the consumer or adhering party, unless the other party proves that the consumer or adhering party otherwise knew of it.”

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The arbitration clause was not enforceable because Dell had not proven that Dumoulin knew of it at the time of the formation of the contract.

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The notice drawing attention to Dell’s standard Terms of Sale was in small print, at the bottom of the page which required at least three ‘clicks’ to reach.

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The website did not have a window displaying the arbitration provision, which the user had to accept before making his purchase. The consumer was required to visit the NAF website.

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Dell had to demonstrate that at the time of sale the consumer knew of the content of these two external clauses: the arbitration clause and the NAF Arbitration Rules.

Web Wrap Agreements Hubbert v. Dell Corp. 835 N.E. 2d 113 (Ill. App. 5 Dist. 2005)

 “We find that the online contract included the “Terms and Conditions of Sale.”  The blue hyperlink entitled “Terms and Conditions of Sale” appeared on numerous Web pages the plaintiffs completed in the ordering process and on Dell’s marketing Web pages. “Common sense dictates that because the plaintiffs were purchasing computers online, they were not novices when using computers. A person using a computer quickly learns that more information is available by clicking on a blue hyperlink.”  Additionally, on three of Dell’s Web pages that the plaintiffs completed to make their purchases, the following statement appeared: “All sales are subject to Dell's Term[s] and Conditions of Sale.” “This statement would place a reasonable person on notice that there were terms and conditions attached to the purchase and that it would be wise to find out what the terms and conditions were before making a purchase.”

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Box Top Agreements Arizona Cartridge Manufacturers Association Inc. v. Lexmark International Inc. 77 U.S.P.Q. 2d 1995 (9th. Cir. 2005)

 “We agree with the district court that Lexmark has presented sufficient unrebutted evidence to show that it has a facially valid contract with the consumers who buy and open its cartridges. Specifically, the language on the outside of the cartridge package specifies the terms under which a consumer may use the purchased item. The consumer can read the terms and conditions on the box before deciding whether to accept them or whether to opt for the nonPrebate cartridges that are sold without any restrictions.”

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Effectiveness of e-mail Notices Campbell v. General Dynamics Government Systems Corporation, 407 F. 3d 546 (1st Cir. 2005)  “…we easily can envision circumstances in which a straightforward e-mail, explicitly delineating an arbitration agreement, would be appropriate…”  “To be blunt, the e-mail announcement undersold the significance of the Policy and omitted the critical fact that it contained a mandatory arbitration agreement. The result was that a reasonable employee could read the email announcement and conclude that the Policy presented an optional alternative to litigation rather than a mandatory replacement for it. Because that primary communication lends itself to such a conclusion--rather than cluing in the reader by including a simple statement of the kind contained in the Policy itself that "[t]he mutual obligations set forth in [the] Policy shall constitute a contract between the Employee and the Company"--we conclude that it failed to put the recipient on inquiry notice of the unilateral contract offer contained in the linked materials.”

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Can an E-mail Satisfy a Statutory Requirement for a Writing? Bazak v. Tarrant Apparel Group 378 F. Supp. 365 (S.D.N.Y. 2005)  “Although e-mails are intangible messages during their transmission, this fact alone does not prove fatal to their qualifying as writings under the UCC. Aside from posted mail, the forms of communication regularly recognized by the courts as fulfilling the UCC “writing” requirement, such as fax, telex and telegraph, are all intangible forms of communication during portions of their transmission. Just as messages sent using these accepted methods can be rendered tangible, thereby falling within the UCC definition, so too can emails.”  “Few would dispute that e-mail is currently one of the most common forms of communication for lay-persons and merchants alike. Thus, permitting otherwise sufficiently precise e-mails to serve as “writings” furthers the manifest intentions of the UCC’s drafters.”  See also, Lamle v. Mattel, Inc. 394 F.3d 1355 (Fed. Cir. 2005) to same effect.

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Can an E-mail Satisfy a Statutory Requirement for a Signature? Lamle v. Mattel, Inc. 394 F.3d 1355 (Fed.Cir.2005)

 “Dispute over the existence of a license agreement. Mattel argued none existed, inter alia, because the California Statute of Frauds was not met by an e-mail that had a type written name at the end of the e-mail that concluded with “Best regards Mike Bucher”.  “California law does provide, however, that typed names appearing on the end of telegrams are sufficient to be writings under the Statute of Frauds. McNear v. Petroleum Export Corp., 280 P. 684, 686 (Cal. 1929); Brewer, 60 P. at 419. California law also provides that a typewritten name is sufficient to be a signature. Marks v. Walter G. McCarty Corp., 205 P.2d 1025, 1028 (Cal. 1949). We can see no meaningful difference between a typewritten signature on a telegram and an email.”

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Can an E-mail Satisfy a Statutory Requirement for a Signature? Mehta v. J. Pereira Fernandes S.A., [2006] E.W.H.C. 813 (Ch. O7 April 2006)  “I have no doubt that if a party creates and sends an electronically created document then he will be treated as having signed it to the same extent that he would in law be treated as having signed a hard copy of the same document. The fact that the document is created electronically as opposed to as a hard copy can make no difference. However, that is not the issue in this case. Here the issue is whether the automatic insertion of a person's e mail address after the document has been transmitted by either the sending and/or receiving ISP constitutes a signature for the purposes of Section 4.”  “In my judgment the inclusion of an e mail address in such circumstances is a clear example of the inclusion of a name which is incidental… in the absence of evidence of a contrary intention. Its appearance divorced from the main body of the text of the message emphasizes this to be so. Absent evidence to the contrary, in my view it is not possible to hold that the automatic insertion of an e mail address is intended for a signature…". See also, SM Integrated Transware Pte Ltd v Schenker Singapore (Pte) Ltd. [2005] SGHC 58

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Apparent Authority of E-Mail Users CSX Transportation, Inc. v. Recovery Express, Inc. 415 F.Supp. 2d 6 (D.Mass.2006)  Does a person that grants another person access to an e-mail with the grantor’s domain name give the grantee apparent authority to act on behalf of the grantor?  Action for breach of contract arising out of a fraud committed by a person who was given access to an e-mail address with the defendant’s domain name. Plaintiff argued that the email address conferred upon the fraudster apparent authority to enter into contracts on behalf of the grantor.  “Such a manifestation by [plaintiff] cannot be sufficient to sustain a claim of apparent authority. Granting an e-mail domain name, by itself, does not cloak the recipient with carte blanche authority to act on behalf of the grantee. Were this so, every subordinate employee with a company e-mail address – down to the night watchman – could bind a company to the same contracts as the president. This is not the law.”  “Though e-mail communication may be relatively new to staid legal institutions, the results in analogous low-tech situations confirm this conclusion. The court could find no cases where, for example, giving someone a business card with the company name or logo, access to a company car, or company stationery, by themselves, created sufficient indicia of apparent authority.” 9

Presumption of Receipt of E-mail Communications American Boat Company, Inc. v. Unknown Sunken Barge, 418 F. 3d 910 (8th Cir.2005)

 “We agree with the District Court that a presumption of delivery should apply to e-mails. ‘A Jury is permitted to infer that information sent via a reliable means – such as the postal service or a telegram – was received.’  We have held that there is ‘no principled reason why a jury would not be able to make the same inference regarding other forms of communication – such as facsimiles, electronic mail, and in-house computer message systems – provided they are accepted as generally reliable and that the particular message was properly dispatched.’ However, in this case, we conclude that the appellants have made a sufficient showing to at least be entitled to an evidentiary hearing on the issue of whether they have adequately rebutted the presumption.”

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Enforcement of On-Line Contracts made by Mistake Chwee Kin Keong & Others v. Digilandmall.com Pte Ltd [2005] SGCA 2.

 Six plaintiffs sought to take advantage of a unilateral mistake made by the defendant who had wrongfully priced a certain commercial laser printer.  The Judge refused to enforce the contract as each knew that there was a mistake as to the pricing on the websites, or at least that each had constructive knowledge of the same.  “While haste per se in concluding a transaction will not ipso facto suggest actual or constructive knowledge, it is certainly a relevant factor which the court is entitled to take into account in determining whether there was such knowledge on the part of the appellants.”

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When is an assignment or license implied into a contract for the development of software? Clearsprings Management Ltd v. Businesslinx Ltd, [2005] EWHC Ch 1487  “It is now well recognised that where a party ("the client") uses the services of an independent contractor ("the contractor") to perform work which involves the creation of a copyright work, the circumstances may be such that there will be implied into the contract an agreement that the contractor will in due course assign the copyright so created to the client. Where the circumstances do not justify the implication of an obligation to assign, the law may nevertheless require the implication of a licence, whether exclusive or otherwise, and on such terms as may be necessary to give business efficacy to the contract…  I would stress…that whether a term is to be implied, and if so what term, is entirely dependent on the circumstances of the individual case.” See also, Robin Ray v. Classic FM Plc [1988] F.S.R. 622, R Griggs Group Ltd v. Evans, [2005] EWCA Civ 11 (Eng.C.A.), Cyprotex Discovery Limited v. The University of Sheffield [2003] EWHC 760 affirmed [2004] EWCA Civ 380 (Eng.C.A.)  Writing requirement formality depends on how obligation arises (1) ownership arising from employee in course of employment (no), (2) express or implied agreement (equitable obligation) to assign (no), (3) non-exclusive license (no), (4) assignment of legal or equitable interest (yes).

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Can an assignee of a copyright enforce the terms of an unassigned license to software? Profile Software Ltd v. Becogent Ltd., [2005] CSOH 28, (Scot.Ct.Sess.)

 “…a licence granted by a copyright owner is binding on every successor in title to his interest in the copyright, except a purchaser in good faith for valuable consideration and without notice (actual or constructive) of the licence, or a person deriving title from such a purchaser. Although there was no case law, there could be little doubt that, as a generality, the right to enforce a licensee's obligations under a licence would pass with transmission of the copyright…  Further, and in any event, cl.2.1 of the assignation, which transferred "such right, title and interest as" Coranta "has and can transfer in the copyright ...", was broad enough, as a matter of language, to cover and did cover the rights of Coranta to enforce the continuing obligations of the licensees in the copyright licences.”

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Contracts related to the Internet Apple Corps Ltd. V. Apple Computer, Inc. [2006] EWHC 996 (Ch) (08 May 2006)  Dispute between Apple Computer and Apple Corp related to whether Apple’s iTunes music service in trade mark license.  “I preface my conclusions on the proper construction of the TMA with two points. First, I am aware that I must be careful to keep the TMA in its correct place in the chronology and the development of technology and to construe it accordingly. The use of the internet, and the ready availability of all sorts of downloads, was not part of the technological scene at the time, and I cannot approach the question of construction as though the particular activity now conducted by Computer (and other digital suppliers) was in the parties' minds at the time.”  “It is true that, as Mr Vos pointed out, it remains necessary to consider how the words of the agreement apply to the more technologically advanced age which has supervened. This is done in the context of statute and statutory instruments (for example, the classification of computer files as "documents") and should be done for this contract. However, I must be careful not to transpose modern circumstances back to 1991 where that would be inappropriate.” per Justice Mann.

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Intellectual Property -Trends Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 S.C.R. 245. per Lebel J.  “The vast and expanding domain of the law of intellectual property is going through a period of major and rapid changes. The pressures of globalization and technological change challenge its institutions, its classifications and sometimes settled doctrines…” 

“Jurisprudence attempts to address — sometimes with difficulty — the consequences of these broad social and economic trends.”

 “The economic value of intellectual property rights arouses the imagination and litigiousness of rights holders in their search for continuing protection of what they view as their rightful property. Such a search carries with it the risk of discarding basic and necessary distinctions between different forms of intellectual property and their legal and economic functions.”

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The Supreme Court Philosophy Towards IP Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22 per Binnie J. who said the following related to the scope and function of trade-marks in dealing with the scope of protection for famous marks:  “Fairness, of course, requires consideration of the interest of the public and other merchants and the benefits of open competition as well as the interest of the trade-mark owner in protecting its investment in the mark. Care must be taken not to create a zone of exclusivity and protection that overshoots the purpose of trade-mark law. As Professor David Vaver observes: ‘On the one hand, well-known mark owners say that people should not reap where they have not sown, that bad faith should be punished, that people who sidle up to their well-known marks are guilty of dishonest commercial practice. These vituperations lead nowhere. One might as well say that the well-known mark owner is reaping where it has not sown when it stops a trader in a geographic or market field remote from the owner’s fields from using the same or a similar mark uncompetitively.’”

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Influence of Foreign Laws The Supreme Court of Canada increasingly looks to the laws of other countries in intellectual property cases.  Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 S.C.R. 245 (In considering the functionality doctrine in trade-mark law)  Veuve Clicquot Ponsardin v. Boutiques Clicquot 2006, S.C.C. 23 (Contrasting depreciation of the value of the goodwill under the Trademarks Act with the United States cause of action for dilution)  Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45 (Determining patentability of life forms)

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Trade-mark Issues

Protection for Functional Product Features Kirkbi AG v. Ritvik Holdings Inc. [2005] 3 S.C.R. 245  “A purely functional design may not be the basis of a trade-mark, registered or unregistered… The law of passing off and of trade-marks may not be used to perpetuate monopoly rights enjoyed under nowexpired patents. The market for these products is now open, free and competitive.”  “Competition between products using the same technical processes or solutions, once patent rights are out of the way, is not unfair competition. It is simply the way the economy and the market are supposed to work in modern liberal societies…”  “Granting such a claim in these circumstances would amount to recreating a monopoly contrary to basic policies of the laws and legal principles which inform the various forms of intellectual property in our legal system. The appellant is no longer entitled to protection against competition in respect of its product. It must now face the rigours of a free market and its process of creative destruction.”

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Function of Trade-marks Mattel, Inc. v. 3894207 Canada Inc. 2006 SCC 22.  “The power of attraction of trade-marks and other “famous brand names” is now recognized as among the most valuable of business assets. However, whatever their commercial evolution, the legal purpose of trade-marks continues… to be their use by the owner “to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others”.  “It is a guarantee of origin and inferentially, an assurance to the consumer that the quality will be what he or she has come to associate with a particular trade-mark (as in the case of the mythical “Maytag” repairman). It is, in that sense, consumer protection legislation…”  “Trade-marks thus operate as a kind of shortcut to get consumers to where they want to go, and in that way perform a key function in a market economy. Trademark law rests on principles of fair dealing. It is sometimes said to hold the balance between free competition and fair competition…”

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Scope of Protection for Famous Brands Mattel, Inc. v. 3894207 Canada Inc., 2006 S.C.C. 22  “If the result of the use of the new mark would be to introduce confusion into the marketplace, it should not be accepted for registration ‘whether or not the wares or services are of the same general class’ (s. 6(2))”.  “The relevant point about famous marks is that fame is capable of carrying the mark across product lines where lesser marks would be circumscribed to their traditional wares or services.”  “I agree with the appellant that a difference in wares or services does not deliver the knockout blow, but nor does the fame of the trade-mark. Each situation must be judged in its full factual context.”  “It follows from the foregoing discussion that, while the fame of the BARBIE brand is a ‘surrounding circumstance’ of importance, the scope of its protection requires consideration of all the circumstances, including the enumerated s. 6(5) factors. The Board found that while the BARBIE trade-mark is indeed famous, its fame in Canada is ‘in association with dolls and doll accessories’, not the other items listed in the appellant’s registrations, including coffee, pizza and other food products.”

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Scope of s.22 Depreciation of Value of Goodwill Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23 “Section 22 has four elements.  Firstly, that a claimant’s registered trade-mark was used by the defendant in connection with wares or services – whether or not such wares and services are competitive with those of the claimant.  Secondly, that the claimant’s registered trade-mark is sufficiently well known to have significant goodwill attached to it. Section 22 does not require the mark to be well known or famous (in contrast to the analogous European and U.S. laws), but a defendant cannot depreciate the value of the goodwill that does not exist.  Thirdly, the claimant’s mark was used in a manner likely to have an effect on that goodwill (i.e. linkage) and  fourthly that the likely effect would be to depreciate the value of its goodwill (i.e. damage).”

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Scope of s.22 Depreciation of Value of Goodwill Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23.

 The word “depreciate” is used in its ordinary dictionary meaning of “lower the value of” as well as to “disparage, belittle, underrate”…In other words, disparagement is a possible source of depreciation, but the value can be lowered in other ways, as by the lesser distinctiveness that results when a mark is bandied about by different users.  Court suggesting U.S. doctrines of “blurring” (creating an association in consumers’ minds between a mark and a different good or service), and “disparagement or tarnishment” of a trademark (where a defendant creates negative association for the mark)  Implications for Canadian law?

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“Pop-up” Ads 1-800 Contacts, Inc. v. WHENU.com, Inc., 414 F.3d 400 (2nd Cir. 2005)  “The primary issue to be resolved by this appeal is whether the placement of pop-up ads on a C-user's screen contemporaneously with either the 1-800 website or a list of search results obtained by the Cuser's input of the 1-800 website address constitutes “use” under the Lanham Act…”  “Absent improper use of 1-800's trademark…such conduct does not violate the Lanham Act. ..”  “…it is routine for vendors to seek specific “product placement” in retail stores precisely to capitalize on their competitors' name recognition…WhenU employs this same marketing strategy by informing C-users who have sought out a specific trademarked product about available coupons, discounts, or alternative products that may be of interest to them.”  “1-800 cites no legal authority for the proposition that advertisements, software applications, or any other visual image that can appear on a C-user's computer screen must be authorized by the owner of any website that will appear contemporaneously with that image. The fact is that WhenU does not need 1-800's authorization to display a separate window containing an ad any more than Corel would need authorization from Microsoft to display its WordPerfect word-processor in a window contemporaneously with a Word word-processing window.”

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Sponsored Advertising and Keying Edina Realty, Inc. v. TheMLSonline.com, 2006 WL 737064 (D.Minn. Mar. 20, 2006)  Plaintiff and the defendant were competing real estate brokerage firms. The plaintiff owned rights to the mark “Edina Realty.” The defendant purchased sponsored links from Google and Yahoo triggered by keyword Internet searches for the words “Edina Realty”.  Court holding that selling sponsored links can be a use in commerce: “[w]hile not a conventional ‘use in commerce,’ defendant nevertheless uses the Edina Realty mark commercially. Defendant purchases search terms that include the Edina Realty mark to generate its sponsored link advertisement.”

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Sponsored Advertising and Keying Merck & Co. Inc., Mediplan health Consulting, Inc., 425 F.Supp.2d 402 (S.D.N.Y.2006) motion for reconsideration denied 431 F.Supp.2d 425.  Canadian online pharmacies engaged Internet search engines Google and Yahoo to have links to their websites displayed, as sponsored links, among the first results returned when a consumer searches the keyword “Zocor.”  “Here, in the search engine context, defendants do not “place” the ZOCOR marks on any goods or containers or displays or associated documents, nor do they use them in any way to indicate source or sponsorship. Rather, the ZOCOR mark is “used” only in the sense that a computer user's search of the keyword “Zocor” will trigger the display of sponsored links to defendants' websites. This internal use of the mark “Zocor” as a key word to trigger the display of sponsored links is not use of the mark in a trademark sense.”

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Sponsored Advertising and Keying 800-JR Cigar, Inc. v. GOTO.com, Inc., 2006 WL 1971659 (D.N.J. 2006)  GOTO.com’s pay-for-priority search engine solicit bids from advertisers for key words or phrases to be used as search terms, giving priority results on searches for those terms to the highest-paying advertiser. Thus, each advertiser's rank in the search results is determined by the amount of its bid on the search term entered by the user.  “Here, GoTo makes trademark use of the JR marks in three ways. First, by accepting bids from those competitors of JR desiring to pay for prominence in search results, GoTo trades on the value of the marks. Second, by ranking its paid advertisers before any "natural" listings in a search results list, GoTo has injected itself into the marketplace, acting as a conduit to steer potential customers away from JR to JR's competitors. Finally, through the Search Term Suggestion Tool, GoTo identifies those of JR's marks which are effective search terms and markets them to JR's competitors. Presumably, the more money advertisers bid and the more frequently advertisers include JR's trademarks among their selected search terms, the more advertising income GoTo is likely to gain.” 27

Liability for Using Meta-tags Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006)  Court finding initial interest confusion where defendants used plaintiff’s trademarks on their web sites and in meta-tags and paid internet marketing search company to list defendants in a preferred position when users searched for plaintiff’s marks in order to divert traffic to their sites. Promatek Industries Ltd. v. Equitrac Corporation, 300 F. 3d 808 (7th Cir. 2002)  “It is not the case that trademarks can never appear in meta-tags, but that they may only do so where a legitimate use of the trademark is being made.”  Court holding that although some uses of website meta-tags can cause initial interest confusion, meta-tags in which a competitor's mark is used truthfully to identify competitor's goods are permissible under Lanham Act such as where industrial equipment seller's website use of competitor's trademark to describe third-party manufactured replacement parts for competitor's products was necessary to describe replacement parts, and there was no suggestion of affiliation between parties.

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Cyber-squatting and Passing Off Global Projects Management Ltd v. Citigroup Inc., [2005] EWHC 2663 GPM acquired ctigroup.co.uk. It did not use the domain name or attempt to sell it to Citigroup or to any third party. The evidence showed that many emails intended for employees in the U.K. of Citigroup had been addressed to the .co.uk address. “The mere registration and maintenance in force of a domain name which leads, or may lead, people to believe that the holder of the domain is linked with a person (eg. Marks & Spencer or British Telecom, or, I would add, Citigroup) is enough to make the domain a potential ‘instrument of fraud’, and it is passing off.” 29

Copyright Issues

Copyright in Web Pages Dawn's Place Ltd. v. The Queen, 2005 TCC 721 Copyright subsists in adult web site containing digital images, graphics and text that were alleged to be an original work protected by copyright. Is GST payable for subscriptions from non-residents to view the site? Section 123 of the Excise Tax Act defines a zero-rated supply to be a supply included in Schedule VI. Section 10 of Part V of Schedule VI of the Act reads:  A supply of an invention, patent, trade secret, trade-mark, trade-name, copyright, industrial design or other intellectual property or any right, licence, or privilege to use any such property, where the recipient is a non-resident person who is not registered under Subdivision d of Division V of Part IX of the Act at the time the supply is made.

“I have concluded that the persons who paid membership fees to the Appellant paid these fees for a limited use of the Appellant's copyright. It therefore follows that the Appellant comes within the meaning of Section 10 and therefore the supply by the Appellant of intellectual property to non-residents of Canada is zero-rated…”

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Copyright in Web Pages  Webloyalty.com Inc. v. Consumer Innovations LLC 76 U.S.P.Q. 2d 1192 (D.Del.2005) (Infringement where the defendant had copied the plaintiff’s internet sale page and special offer banner used in connection with its member discount programs.)  Netboard Inc. v. Avery Holdings Inc. [2005] F.C.J. No. 1723 Hughes J. left open for consideration whether meta tags forming part of a website were protectible subject matter saying: “This question should not be pre-judged.”

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Computer Created Works Haupt v. Brewers Marketing Intelligence (Pty.) Ltd. [2006] S.C.A. 39 (R.S.A.)  “The Act does not contain a definition of ‘computer-generated’. In my view a work only qualifies as having been computer-generated if it was created by a computer in circumstances where there is no human author of the work. If there is a human author the work is computer assisted and not computer generated.”  “The structures for the various databases were created by Coetzee. Although he made use of the computer program Delphi to do so they were not generated by a computer: the computer merely assisted him in creating them. It is he who decided on the number of columns, their width and the field names. The creation of such a table is no different from the creation of a document by utilising a word processor. In such a case the computer is used as a tool. The bare databases so created, therefore, did not qualify as computergenerated literary works.”  See also, Nova Productions Limited v. Mazooma Games Ltd., [2006] E.W.H.C. 24 (Ch) (20 January 2006) (Court finding that video game produced using various computer tools including tools that automatically generated composite frames were either computer assisted or computer generated works under the U.K. copyright statute.)

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Computer Created Works Ross, Brovins & Oehmke, P.C. v. Lexis Nexis Group, 2006 WL 2639749 (6th.Cir.Sept. 15, 2006)

 “LawMode's automation is not sufficiently original to warrant copyright protection.”  “… LawMode does not have a valid copyright in the appearance of the dialog boxes because LawMode used the default settings on HotDocs, the tool used to create the templates.”  “LawMode's “choice” to use HotDocs' default settings was too trivial to be original because using the default setting amounted to no more than adopting the choices made by the developer of HotDocs. Copyright law extends protection to works that are “independently created by the author (as opposed to copied from other works). LawMode's choice to use the default settings is more in the nature of copying from other works than independent creation.” 34

Scope of Reproduction Right Baigent v. The Random House Group Ltd. (The Da Vinci Code), [2006] E.W.H.C. 719 (Ch) (7 April 2006) Per Justice Peter Smith

 “As the Claimants set out in their closing submissions, the extreme points are easy to identify, but there is a point on the spectrum which the complexity of the expression warrants protection. The line to be drawn is to enable a fair balance to be struck between protecting the rights of the author and allowing literary development. That seems to me to be a fair stance to take.”

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Copying for Compatibility Reasons Lexmark International Inc. v. Static Control Components Inc. 387 F. 3d 522 (6th Cir.2005) Court holding that “lock-out” codes fall on the functional-idea side of the copyright line and are not protectable under the scènes à faire doctrine.  “Judge Feikens is correct that a poem in the abstract could be copyrightable. But that does not mean that the poem receives copyright protection when it is used in the context of a lock-out code. Similarly, a computer program may be protectable in the abstract but not generally entitled to protection when used necessarily as a lock-out device.”

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Copying for Compatibility Reasons Positive Software Solutions, Inc. v. New Century Mortgage Corporation, 259 F. Supp 2d 531, Aff’d 90 Fed. Appx. 728 (5th Cir.2004)  “Some argue that the customer desire for functional compatibility with a copyrighted work is a “market factor” that makes those elements required for compatibility unprotected… This confuses the functional requirements of the application (e.g., to perform word processing) with the commercial desirability of compatibility (e.g., greater market for word processor if it will import Microsoft Word.doc file formats).”  “The Court confesses some puzzlement with the apparent attractiveness of this commercial compatibility argument in the computer software copyright arena. It is not an argument that would even be attempted in traditional areas of copyright. (“In order to sell colored pieces of cardboard, market factors required that I duplicate the appearance of Pokemon/Yu-Gi-Oh/Magic Cards in order to be compatible.”) The persistence of the argument in the computer software copyright context perhaps reflects unease with the fit between computer software and copyright, and a perception that market needs justify a bit of judicial fiddling with the scope of copyright. What the market needs is perhaps better left to the realm of private contract, legislative change, or, in the appropriate case, antitrust law.”

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Scope of Importation Right Euro Excellence Inc. v. Kraft Canada Inc., 2005 FCA 427  Is it infringement to import a product with packaging lawfully made by the owner of the copyright outside Canada without the consent of the Canadian exclusive licensee thereof? Answer: Yes.  S27.(2) It is an infringement of copyright for any person to…(e) import into Canada for the purpose of doing anything referred to in paragraphs (a) to (c), a copy of a work… that the person knows or should have known infringes copyright or would infringe copyright if it had been made in Canada by the person who made it.  What will the Supreme Court do?

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Licenses Implied in Posting a Work to the Internet Field v. Google, Inc., 77 U.S.P.Q. 2d (D. Nev. 2006). Field alleged that the search engine Google directly infringed his copyrights when a Google user clicked on a "cached" link to the web pages containing Field's copyrighted works and downloaded a copy of those pages from Google's computers.

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“According to the undisputed testimony of Google's Internet expert, Dr. John Levine, website publishers typically communicate their permissions to Internet search engines (such as Google) using "meta-tags." A website publisher can instruct a search engine not to cache the publisher's Website by using a "no-archive" meta-tag. According to Dr. Levine, the "no-archive" meta-tag is a highly publicized and well-known industry standard… Field concedes he was aware of these industry standard mechanisms, and knew that the presence of a "no archive" meta-tag on the pages of his Website would have informed Google not to display "Cached" links to his pages. Despite this knowledge, Field chose not to include the no-archive meta-tag on the pages of his site. He did so, knowing that Google would interpret the absence of the metatag as permission to allow access to the pages via "Cached" links. Thus, with knowledge of how Google would use the copyrighted works he placed on those pages, and with knowledge that he could prevent such use, Field instead made a conscious decision to permit it. His conduct is reasonably interpreted as the grant of a license to Google for that use.”

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See also, Paperboy [2005] E.C.D.R. 7 (BGH (Ger)) (“A copyright owner who makes available a work protected by copyright to the public on the internet, but without technological measures, by doing so himself enables the uses which an on demand-user can make…in general no state of interference with copyright law is created if access to a work is facilitated by the setting of hyperlinks, or indeed in the form of deep links.”)

Liability for Linking and Framing Perfect 10 v Google, Inc., 78 U.S.P.Q.2d 1072 (Cen.D.Cal. 2006)  Does an operator of a search engine (Google) directly infringe copyright when it (1) displays and distributes infringing copies of full-size images hosted by third-party websites, or (2) creates, displays, and distributes thumbnails of such full-size images?  There are at least two approaches to defining “display” in the context of in-line linking: (1) a “server” test, and (2) an “incorporation” test.  “From a technological perspective, one could define “display” as the act of serving content over the web—i.e., physically sending ones and zeroes over the internet to the user’s browser.”  “From a purely visual perspective, one could define “display” as the mere act of incorporating content into a webpage that is then pulled up by the browser.”  “…the most appropriate test is also the most straightforward: the website on which content is stored and by which it is served directly to a user, not the website that in-line links to it, is the website that “displays” the content.”  What will the 9th Circuit Court say?

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Liability for Linking and Framing Perfect 10 v Google, Inc., 78 U.S.P.Q.2d 1072 (Cen.D.Cal. 2006) “…Google’s use of frames and in-line links does not constitute a ‘display’ of the full-size images stored on and served by infringing third-party websites.” “Although Google frames and in-line links to third-party infringing websites, it is those websites, not Google, that transfer the full-size images to users’ computers. Because Google is not involved in the transfer, Google has not actually disseminated —and hence, and has not distributed—the infringing content.” “Applying the server test to Google’s use of thumbnails the Court finds that Google does “display” thumbnails of P10’s copyrighted images. Google acknowledges that it creates and stores those thumbnails on its own servers—and that upon receiving search queries, it responds by displaying a grid of those thumbnails.” See also U-Haul Int'l, Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723, (E.D.Va.2003), Wells Fargo & Co. v. WhenU.com, Inc., 293 F.Supp.2d 734, (E.D.Mich.2003); 1-800 Contacts, Inc v WHENU.com, Inc 309 F.Supp.2d 467 rev’d on other grounds 414 F.3d 400 (2nd Cir.2005) dealing with framing in the context of pop-up ads.

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Liability for Linking and Framing Universal Music Australia Pty Ltd. v. Cooper, [2005] FCA 972  Is the operator of a web site that has structured in-line (automated) links to infringing copyright materials liable for authorizing infringement?  “The Cooper website is carefully structured and highly organised and many of its pages contain numerous references to linking and downloading. The website also provides the hyperlinks that enable the user to directly access the files on, and activate the downloading from, the remote websites. The website is clearly designed to, and does, facilitate and enable this infringing downloading. I am of the view that there is a reasonable inference available that Cooper, who sought advice as to the establishment and operation of his website, knowingly permitted or approved the use of his website in this manner and designed and organised it to achieve this result.”  “The words "sanction" and "approve" are expressions of wide import. Cooper, in my view, could have prevented the infringements by removing the hyperlinks from his website or by structuring the website in such a way that the operators of the remote websites from which MP3 files were downloaded could not automatically add hyperlinks to the website without some supervision or control by Cooper.” 42

Local Browsing Caching Perfect 10 v. Google, Inc., 78 U.S.P.Q.2d 1072 (Cen.D.Cal. 2006)

 “P10 argues that merely by viewing such websites, individual users of Google search make local ‘cache’ copies of its photos and thereby directly infringe through reproduction. The Court rejects this argument. Local browser caching basically consists of a viewer's computer storing automatically the most recently viewed content of the websites the viewer has visited. It is an automatic process of which most users are unaware, and its use likely is ‘fair’ under 17 U.S.C. § 107.”  What would happen in Canada?

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Music Wars

Challenges Posed by New Technologies Blueport Company, LLP v. The United States, 2006 WL 1836165 (Ct.Fed.Claims.June 29, 2006)  “The law of copyright protection faces an unprecedented challenge brought on by rapid and far reaching technological innovations. The purpose of copyright law has always been to provide authors an adequate level of legal protection to ensure that they profit from their creations while, at the same time, not prohibiting others from making improvements upon those ideas. This balance is created to increase the likelihood that the optimal level of creative works enters the market.”  “But technology, ranging from as the widespread use of photocopiers to the growth of the Internet, has overwhelmed the institutional copyright protection framework, and thereby tilted economic incentives against protection and towards copying… Copyright holders have responded by employing technological remedies, such as encryption coding and password protection, to counter these technological maladies. This, in turn, has led to countermeasures to circumvent software and other copyright protections, the most infamous being "hacking" into computers in order to destroy encrypted protection.”

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Liability of Distributors of File Share Software and Services Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 75 U.S.P.Q. 2d 1001 (U.S. 2005)

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Is a distributor of P2P software which is capable of both lawful and unlawful uses liable for acts of copyright infringement by third parties using the software?

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One who distributes a device with the object of promoting its use to infringe copyright, as shown by a clear expression or affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.

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Contributory infringement occurs by intentionally inducing or encouraging direct infringement. An affirmative intention to induce copyright infringement may be inferred from advertising an infringing use or instructing how to engage in an infringing use. Liability for inducing infringement need not be found only on the basis of presuming or imputing fault based upon product characteristics, but from inferring a patently illegal objective from statements and actions of the defendant.



The defendants intentionally encouraged direct infringement. First, the defendants aimed to satisfy a known source of demand for copyright infringement, the market composed of former Napster users. Second, the defendants did not attempt to develop filtering tools to diminish copyright infringing activity using the software. Third, the defendants earned advertising revenue by streaming advertising onto the software interface. The revenue grew with highervolume use of the software, through more downloading of copyrighted files.

Liability of Distributors of File Share Software and Services Universal Music Australia Pty Ltd. v. Sharman License Holdings Ltd., [2005] FCA 1242 Is a distributor of P2P software (kazaa) which is capable of both lawful and unlawful uses liable for authorizing acts of copyright infringement by third parties using the software? The respondents had long known that the Kazaa system is widely used for the sharing of copyright files. Sharman included on the Kazaa website exhortations to users to increase their file-sharing. There are technical measures (keyword filtering and gold file flood filtering) that would enable the respondents to curtail – although probably not totally to prevent – the sharing of copyright files. The respondents have not taken any action to implement those measures. It would be against their financial interest to do so. It is in the respondents’ financial interest to maximize, not to minimize, music file-sharing. Advertising provides the bulk of the revenue earned by the Kazaa system. Sharman infringed copyright by authorising Kazaa users to make copies of those sound recording and to communicate those recordings to the public.

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Scope of Communication to the Public Right “We therefore conclude that purchasing a musical ringtone over the Internet involves a transmission which constitutes a communication to the public by telecommunication.” Copyright Board, Tariff 24 – Ringtones (2003-2005) (Aug. 18, 2006)

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Is File Sharing “Fair Use” BMG Music v. Gonzalez No. 05-1314 (7th Cir.2005) “With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrighted material without compensation to authors cannot be deemed “fair use.” Copyright law lets authors make their own decisions about how best to promote their works; copiers such as Gonzalez cannot ask courts (and juries) to second-guess the market and call wholesale copying “fair use” if they think that authors err in understanding their own economic interests or that Congress erred in granting authors the rights in the copyright statute. Nor can she defend by observing that other persons were greater offenders…” See also United States v. Slater 69 U.S.P.Q. 2d 1081 (7th Cir. 2003) Not fair use for an organization called “Pirates With Attitudes” (PWA) to make software freely available over the internet for downloading. The court stated “It is preposterous to think that Internet piracy is authorized by virtue of the fair use doctrine.”

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Remedies for infringement

Anton Piller Orders Celanese Canada Inc. v. Murray Demolition Corp., 2006 S.C.C. 36  “Experience has shown that despite their draconian nature, there is a proper role for Anton Piller orders to ensure that unscrupulous defendants are not able to circumvent the court’s processes by, on being forewarned, making relevant evidence disappear. Their usefulness is especially important in the modern era of heavy dependence on computer technology, where documents are easily deleted, moved or destroyed. The utility of this equitable tool in the correct circumstances should not be diminished. However, such orders should only be granted in the clear recognition of their exceptional and highly intrusive character and, where granted, the terms should be carefully spelled out and limited to what the circumstances show to be necessary. Those responsible for their implementation should conform to a very high standard of professional diligence. Otherwise, the moving party, not its target, may have to shoulder the consequences of a botched search.”

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Anton Piller Orders Ridgewood Electric Ltd. (1990) v. Robbie, (2005), 74 O.R. (3d) 514 Per Corbett J.  “Anton Piller orders play an increasingly important role in protecting businesses from disgruntled or departing employees.”  “With the advent of computer technology, in many cases Anton Piller orders will be effective only if they can be enforced with speed and with an element of surprise. It is not acceptable that the search be delayed for days, or even hours, once the defendant has notice of the order. The information or property to be preserved may be copied, transferred across the world, and erased from a computer with a few apt keystrokes. Once the order is served, the premises must be secured immediately, and the search must proceed. Anton Piller was decided in 1976. Computer technology did not exist then as it does now. The business world was, truly, a different place.”  “Because of the advent of the personal computer, it is now practical for vast quantities of business documents to be secreted on a home or portable computer or on easily portable data discs or tapes. These materials may be kept at home, in a car or in a briefcase, and can be carried easily. Consequently, it is increasingly common for Anton Piller orders to provide for search of private dwellings, vehicles and luggage where computers may be found… For Anton Piller orders to be effective in this context, they must provide for searches of these intimate private spaces.” 52

Anton Piller Orders Celanese Canada Inc. v. Murray Demolition Corp., 2006 S.C.C. 36 The essential conditions for the making of an Anton Piller order are:  “First, the plaintiff must demonstrate a strong prima facie case.  Second, the damage to the plaintiff of the defendant’s alleged misconduct, potential or actual, must be very serious.  Third, there must be convincing evidence that the defendant has in its possession incriminating documents or things; and  Fourthly, it must be shown that there is a real possibility that the defendant may destroy such material before the discovery process can do its work.” Court set out detailed guidelines for preparation and execution of an Anton Piller order.

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Injunctions Navitaire Inc. v. Easy Jet Airline Co. Ltd. (No. 2) [2005] E.W.H.C. 0282 (Ch.)

 An injunction need not be granted where the effect of the grant of the injunction “would be oppressive.”  Injunctive relief granted with respect to infringing icons and screens. However, no injunction granted related to the migration of data as this order would have been oppressive requiring considerable testing and checking to be done and the operation would be associated with risk.

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Injunctions EBAY INC. et al. v. MERCEXCHANGE, L. L. C. (U.S. Sup. Ct. May 15, 2006) 

“And as in our decision today, this Court has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed.”

Per Justices Kennedy, Stevens, Souter, and Breyer

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“In cases now arising trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees…”

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“For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent…”

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“When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.”

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“In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.”

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“The equitable discretion over injunctions, granted by the Patent Act, is well suited to allow courts to adapt to the rapid technological and legal developments in the patent system. For these reasons it should be recognized that district courts must determine whether past practice fits the circumstances of the cases before them…”

Privacy

Invasion of Privacy Tort Somwar v. McDonald's Restaurants of Canada Ltd. (2006) 79 O.R. (3d) 172 (Ont.S.C.)  Employee sued employer for invasion of privacy when employer conducted credit check on employee without his permission.  “With advancements in technology, personal data of an individual can now be collected, accessed (properly and improperly), and disseminated more easily than ever before. There is a resulting increased concern in our society about the risk of unauthorized access to an individual's personal information. The traditional torts such as nuisance, trespass, and harassment may not provide adequate protection against infringement of an individual's privacy interests…”  “…the foregoing analysis leads me to conclude that the time has come to recognize invasion of privacy as a tort in its own right”.  “the plaintiff has not pleaded a breach of statute as forming the basis for his claim. Instead, he relies on the common law intentional tort of invasion of privacy. It may be that he will rely on evidence of a breach of the [Consumer Reporting Act] as proof of "the constituent elements of tortious responsibility". Implications for violation of PIPEDA?

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Patriot Act PIPEDA Case Summary #313, Bank's notification to customers triggers PATRIOT Act concerns The Privacy Commissioner received a number of complaints after the CIBC sent a notification to its VISA customers amending its credit cardholder agreement. The notification referred to the use of a service provider located in the U.S. and the possibility that U.S. law enforcement or regulatory agencies might be able to obtain access to cardholders' personal information under U.S. law. “Furthermore, even if one were to consider the issue of ‘comparable protection’ from the perspective of U.S. versus Canadian anti-terrorism legislation, it was clear to the Assistant Commissioner that there is a comparable legal risk that the personal information of Canadians held by any organization and its service provider — be it Canadian or American — can be obtained by government agencies, whether through the provisions of U.S. law or Canadian law. The Assistant Commissioner therefore determined that CIBC was in compliance with Principle 4.1.3.” “This Office has taken the position that companies are not required to provide customers with the choice of opting-out where the third-party service provider is offering services directly related to the primary purposes for which the personal information was collected.” See also, Privacy Matters: The Federal Strategy to Address Concerns About the USA PATRIOT Act and Transborder Data Flows April 2006

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Jurisdictional Reach of PIPEDA Privacy Commissioner letter about Abika.com, an on-line data broker in the U.S. that collects, uses and discloses the personal information of Canadians, November 18, 2005 “There is nothing explicit in PIPEDA to suggest that it was meant to apply outside of Canada or that the powers of the Commissioner would extend beyond Canada’s borders…” “While it is clear that the Commissioner may request information from anyone who she believes may have information relevant to an investigation, the formal investigative powers apply only within Canada…” “despite the existence of a ‘.ca’ registration, there are still insufficient connecting factors to indicate a real and important link between Canada and Abika.com’s operations in the U.S. As such, we cannot bring Abika.com within Canadian jurisdiction and deem them subject to PIPEDA…” “In conclusion, we cannot proceed with your complaint as we lack jurisdiction to compel U.S. organizations to produce the evidence necessary for us to conduct the investigation.”

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Privacy Issues in Obtaining Infringers’ Identities Cinepoly Records Company Limited v. Hong Kong Broadband Network Limited [2006] 1 HKLRD 255 (26 January 2006)  “The Internet is invaluable and even indispensable, some would suggest, to the free communication, dissemination and sharing of information in modern societies… Users of the Internet, like any individuals, must abide by the law. And the law protects the users’ rights as much as others’ legitimate rights, including those of the copyright owners. Some online copyright infringers may well think that they will never be caught because of the cloak of anonymity created by the P2P programs. They are wrong. And from now on, they should think twice. They can on longer hide behind the cloak of anonymity. The court can and will, upon a successful application, pull back the cloak and expose their true identity. It is not an intrusion into their privacy. It does not even lie in their mouths to say so. For protection of privacy is never and cannot be used as a shield to enable them to commit civil wrongs with impunity.” Interscope Records v. Duty, 79 U.S.P.Q.2d 1043 (D.Ariz.2006)  “Duty alleges that the Recording Companies committed this tort by "invading” [her] alleged computer.“…More specifically, it appears that Duty claims that the Recording Companies committed this tort by accessing her Kazaa share folder, which is reproduced as exhibit B to the complaint… it is undisputed that the share file is publically available, and therefore Duty cannot show that the Recording Companies intruded upon her private affairs. Accordingly, the Recording Companies' motion to dismiss Duty's intrusion upon seclusion claim is granted.”

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Clickstream Data and Privacy Gonzales v. Google, 234 F.R.D. 674 (N.D.Cal.2006)

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The case involved a civil action against the AG, challenging the constitutionality of the U.S. Child Online Protection Act (COPA), which prohibits the knowing making of a communication by means of the Internet, “for commercial purposes that is available to any minor and that includes material that is harmful to minors.”

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The AG subpoenaed Google to compile and produce a information from its search index, and to turn over a significant number of search queries entered by its users.

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“The Government contends that there are no privacy issues raised by its request for the text of search queries because the mere text of the queries would not yield identifiable information. Although the Government has only requested the text strings entered… , basic identifiable information may be found in the text strings when users search for personal information such as their social security numbers or credit card numbers through Google in order to determine whether such information is available on the Internet… The Court is also aware of so-called “vanity searches,” where a user queries his or her own name perhaps with other information. Google's capacity to handle long complex search strings may prompt users to engage in such searches on Google. Thus, while a user's search query reading “[user name] stanford glee club” may not raise serious privacy concerns, a user's search for “[user name] third trimester abortion san jose,” may raise certain privacy issues as of yet unaddressed by the parties' papers. This concern, combined with the prevalence of Internet searches for sexually explicit material generally not information that anyone wishes to reveal publicly-gives this Court pause as to whether the search queries themselves may constitute potentially sensitive information.”

Jurisdiction

Patent Liability when software is sent outside of the U.S. for duplication AT&T Corp. v. Microsoft Corporation 75 U.S.P.Q.2d 1506 (Fed.Cir.2005)  Court finding liability under Section 271(f) when software is sent outside of the U.S. via electronic transmission or on a “golden master” disk for duplication or manufacture outside of the country.  In a strongly worded dissent Judge Rader pointed out that the Court was creating “a new rule that foreign copying of a component of a patented invention shipped from the U.S. gives rise to liability in the U.S.  “Nothing in § 271(f) or its enacting documents expresses an intent to attach liability to manufacturing activities occurring wholly abroad. This court’s ruling, however, does exactly that: It holds Microsoft liable for the activities of foreign manufacturers making copies of the patented component abroad…  Section 271(f) protects foreign markets from domestic competitors. Section 271(f) does not, or at least did not until today, protect foreign markets from foreign competitors. This court’s expansion of § 271(f) to offer protection to foreign markets from foreign competitors distorts both the language and the policy of the statute. This court should accord proper respect to the clear language of the statute and to foreign patent regimes by limiting the application of § 271(f) to components literally ‘shipped from the United States’.”  See also, Eolas Technologies Incorporated v Microsoft Corporation 399 F.3d 1325 (Fed.Cir.2005) 63

Patent Liability Where Essential Component is Outside U.S. NTP Inc v. RIM 418 F.3d 1282 (Fed.Cir.2005)  The question before the Federal Circuit was “whether the using, offering to sell, or selling of a patented invention is an infringement under section 271(a) if a component or step of the patented invention is located or performed abroad.”  The Court decided that the use of a claimed system under section 271(a) is “the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained”.  Court found it was proper for the jury to have found that use of NTP’s asserted system claims by RIM’s customers occurred within the United States.  “RIM’s customers located within the United States controlled the transmission of the originated information and also benefited from such an exchange of information. Thus, the location of the Relay in Canada did not, as a matter of law, preclude infringement of the asserted system claims in this case…”  “When RIM’s United States customers send and receive messages by manipulating the handheld devices in their possession in the United States, the location of the use of the communication system as a whole occurs in the United States. This satisfactorily establishes that the situs of the “use” of RIM’s system by RIM’s United States customers for purposes of section 271(a) is the United States.”

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Patent Liability Where a Method Step is Outside U.S. NTP Inc v. RIM 418 F.3d 1282 (Fed.Cir.2005)  The Court stated that under section 271(a), “the concept of ‘use’ of a patented method or process is fundamentally different from the use of a patented system or device.”  “Because a process is nothing more than the sequence of actions of which it is comprised, the use of a process necessarily involves doing or performing each of the steps recited. This is unlike use of a system as a whole, in which the components are used collectively, not individually.”  On the basis of this distinction the Court held that “a process cannot be used ‘within’ the United States as required by section 271(a) unless each of the steps is performed within this country.”  Thus, the Court agreed with RIM that a finding of direct infringement by RIM’s customers under section 271(a) of the method claims that recited an “interface switch” or an “interface” was precluded by the location of RIM’s Relay in Canada.

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Was the NTP v RIM case Rightly Decided? Zoltek Corporation v. United States Case No. 04-5100, 5102 (Fed.Cir. March 31, 2006)  Court questioned whether the “control and beneficial use test” formulated in Decca and which was the basis for the decision in the RIM case had any application to infringement under § 271(a).  Circuit Judge Gajarsa wrote a concurring opinion in the case stating: •

“the NTP proposition is … the result of an unchecked propagation of error in our case law, and its viability may eventually be challenged”.

•

“The NTP court should not have articulated such a relationship, especially not through reliance on logically flawed dicta, and I can see neither the need nor the clear basis for us —at least in this case—to attempt to support through logic, post hoc, what the NTP court has wrought through folly.”

 He then went on to address “the ignoble history of the NTP proposition”.

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Enforcement of Foreign Orders Disney Enterprises Inc. v. Click Enterprises Inc. 2006 CanLII 102 13 (Ont. S.C.)

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Ontario court enforced an order made by a New York court awarding damages against the Ontario respondents for copyright infringement and unfair competition.

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The defendants were resident in Ontario, but owned or controlled the interactive websites through which subscription agreements were sold to residents of the United States including residents of New York that facilitated the illegal downloading of films.

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The court observed that our courts recognize a sufficient connection for taking jurisdiction in copyright matters where Canada is either the country of transmission or the country of reception. On this basis, there were reasonable grounds for the United States District Court to assume jurisdiction. Further, there was a real and substantial connection to the subject matter of the action. The court noted that

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“When activities are conducted on the internet, they have the potential to cause harm anywhere and everywhere. The respondents’ websites were available ‘through normal distributive channels’ to the residents of New York and their products caused harm there. There was no juridical advantage to commencing the action in New York. In my view, this was not only an appropriate jurisdiction in which to bring the action, but one that was arguably fairer to the respondents than if it had been brought as it might have been, in a more geographically remote jurisdiction such as California.”

Where On-Line Defamation Occurs The common law regards the publication of an Internet posting as taking place where it is down-loaded or accessed and not where the information is input into a computer to be made available for accessing or where the host server upon which the material resides is located. Emperor (China Concept) Investments Ltd v. SBI E-2 Capital Securities Ltd. [2006] HKEC 50 (H.K.C.A.), nationwide news Pty Limited v. The University of Newlands & Anor [2005] NZCA 317 (9 Dec, 2005). Godfrey v. Demon Internet [2001] QB 201; Loutchansky v. Times Newspapers Ltd [2002] QB 783 (Eng.C.A.), Gutnick v. Dow Jones Inc [2002] HCA 56, King v. Lewis & Ors [2004] EWHC 168 (QB) (06 February 2004), affirmed [2004] EWCA Cic. 1329, Wiebe v. Bouchard, [2005] B.C.J. (Q.L.) No. 73 (B.C.S.C.); Burke v. NYP Holdings, Inc. 2005, B.C.S.C. 1287, Barrick Gold Corp. v. Blanchard & Co (2003) 9 B.L.R. (4th) 316 (Ont.S.C.)

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