Monkey See, Monkey Do… However Monkey Does Not Enjoy Copyright Protection

By Richard Stobbe

I know this story crested a few weeks ago, but who can resist it? A famous 1998 Molson Canadian ad posed a Canadian version of the infinite monkey theorem. The cheeky ad, showing a seemingly endless array of monkeys on typewriters, sidestepped the more important question about whether the monkeys as authors would enjoy copyright protection over the works they created.

A wildlife photographer’s dispute with Wikimedia over ownership of photographs taken by primates in Indonesia has brought international attention to this pressing issue. The “Compendium of U.S. Copyright Office Practices, Third Edition” now explicitly states that photographs by monkeys are not eligible for copyright protection. Nor are elephant-paintings deserving of copyright. “Likewise,” the Compendium notes dryly, “the Office cannot register a work purportedly created by divine or supernatural beings.” Robots are also out of luck.

There is no word on whether Canada is directly addressing this question.

Calgary - 09:00 MST

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Confidentiality & Sealing Orders in Software Disputes

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By Richard Stobbe

Two software companies wanted to integrate their software products. The relationship soured and one of the parties - McHenry - purported to terminate the Software Licensing and Development Agreement and then launched a lawsuit in the Federal Court in the US, claiming copyright infringement and breach of contract. The other party - ARAS - countered by invoking the mandatory arbitration clause in the software agreement. The US court compelled the parties to resolve their dispute through arbitration in Vancouver. After the arbitration, the arbitrator’s decision was appealed in the BC Supreme Court. In that appeal, McHenry sought a “sealing order” asking the BC court, in effect, to order confidentiality over the March 26, 2014 Arbitration Award itself. This is because ARAS, who prevailed at arbitration, circulated the arbitration award to others.

In the recent decision (McHenry Software Inc. v. ARAS 360 Incorporated, 2014 BCSC 1485 (CanLII)) the BC Supreme Court considered the law of “sealing orders” and confidentiality in the context of a dispute between two software companies.

The essence of McHenry’s complaint was that the arbitrator’s award should be treated confidentially, since it contained confidential and sensitive information about the dispute, which could harm or disadvantage McHenry in its negotiations with future software development partners.

The court reviewed the legal principles governing sealing orders. A “sealing order” is simply court-ordered confidentiality over court records or evidence. While there is a presumption in favour of public access in the Canadian justice system, there are times when it is appropriate to deny access to certain records to prevent a “serious risk to an important interest” as long as “the public interest in confidentiality outweighs the public interest in openness”. (To dig deeper on this, see: Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41 (CanLII), 2002 SCC 41.)

If you were hoping for a handy three-part test, you’re in luck:

  1. First, the risk in question must be real and substantial, and must pose a “serious threat” to the commercial interest in question.
  2. The interest must be tied to a public interest in confidentiality. The SCC said: “a private company could not argue simply that the existence of a particular contract should not be made public because to do so would cause the company to lose business, thus harming its commercial interests.” Courts must remember that a confidentiality order involves an infringement on freedom of expression, so it should not be undertaken to satisfy purely commercial interests.
  3. Third, the court must consider whether there are any reasonable alternatives to a confidentiality order, or look for ways to restrict the scope of the order as much as possible in the context.

Ultimately, the BC Court was not sympathetic to McHenry’s arguments for a sealing order. If McHenry was so concerned about the confidentiality of these proceedings, the court argued, then McHenry would not have launched a lawsuit against ARAS in the US Federal Court, where there is no confidentiality. In pursuing litigation, McHenry filed numerous documents in the public record, including its Arbitration Notice, its Statement of Claim in the Arbitration and its petition in the BC Court proceedings, some of which contained potentially sensitive information.

“Moreover,” the court continued, “there is no general principle that the confidentiality of arbitration proceedings carries over to court proceedings when the arbitration is appealed. On the contrary, such court proceedings are generally public.”

This case serves as a reminder of the confidentiality issues that can arise in the conext of a dispute between software companies, both in arbitration proceedings and in the litigation context. Make sure you seek experienced counsel when handling the complex issues of confidentiality, sealing orders and licensing disputes.

Calgary - 07:00

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When Milk is Not Milk: Dairy Farmers of Canada v. Cytosport, Inc.

monster_product_hero_339x415_chocolate.pngBy Richard Stobbe

You can’t get a trade-mark registration for a word that will deceive consumers. Put into legalese, section 12 of the Canadian Trade-marks Act says a trade-mark is not registrable if it is either “clearly descriptive or deceptively misdescriptive … of the character or quality of the wares or services in association with which it is used or proposed to be used…”

If a trade-mark applies the word “MILK” to a non-dairy product, can that be considered deceptively misdescriptive? This question came up in the trade-marks opposition case of Dairy Farmers of Canada v Cytosport, Inc., 2014 TMOB 148 (CanLII), in which the Dairy Farmers of Canada opposed the registration of the marks the trade-marks MONSTER MILK and MONSTER MLK for use with “Dietary and nutritional supplements for use in athletic training, namely for improving body strength and building muscle, excluding ready to drink beverages.”

The Dairy Farmers essentially argued that the average consumer would believe that the drinks sold under the brand MONSTER MILK would contain “real milk”. In a wide-ranging analysis, which covered the Food and Drug Act, to consideration of Nourishing Coconut Milk Shampoo, as well as references to “milk” in the Oxford Dictionary, the Board ultimately decided that the average consumer would not be deceived, since it would not be apparent which meaning of milk would apply in the case of the MONSTER MILK brand.

This case illustrates the importance of strong affidavit evidence in opposition proceedings: here, the applicant submitted evidence from dictionary meanings, Google search results, and shopping excursions to show common uses of the word MILK in association with other non-dairy products.

Calgary - 07:00 MST

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Online Terms - What Works, What Doesn’t

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By Richard Stobbe

The online fine print - those terms and conditions that you agree to when you buy something online - it really does matter where those terms are placed in the checkout process. A recent US case illustrates this point. In Tompkins v. 23andMe, Inc., 2014 WL 2903752 (N.D. Cal. June 25, 2014), the court dealt with an online checkout process for DNA testing kits sold by 23andMe. When completing a purchase, customers were not presented with any mandatory click-through screen for the transaction to complete. There was a passive link at the footer of the transaction page, something the court dismissed as a “browsewrap”, which was ineffective to bind the customers. In other words, the Terms of Service were not effective at that point in the transaction.

In order to obtain test results, however, customers were obliged to register and create an account with 23andMe. In this (post-sale) registration process, a mandatory click-through screen was presented to customers, not once but twice. The court decided that this second step was valid to bind the customers who purchased the DNA testing kits.

While this shows that courts can take a position that is sympathetic to online retailers, this should not be taken as an endorsement of this contracting process. In my view, the better approach would be to push customers through a mandatory click-through screen at both stages. This is particularly so in a case like 23andMe, where the first transaction is for sale of a product (the kit) and the second step relates to a service (processing test results). The two, of course, are intertwined, but the double click-through reduces risk and plugs the holes left by the single click-through. For example, a customer may buy a kit and never create an account, or use a kit without have purchased it. As the court notes: “it is possible for a customer to buy a DNA kit, for example, as a gift for someone else, so that the purchasing customer never needs to create an account or register the kit, and thus is never asked to acknowledge the TOS.”

We can speculate on why the click-through appeared at the second account-creation step, and not the first kit-purchasing step. Sometimes, the purchasing process is modified over time due to changes in marketing or sales strategies. Perhaps the company broke a unified transaction process, which ended with account-creation, into two separate steps after market research or customer feedback. When something like this happens, it is important to repeat the legal review, to ensure compliance with e-commerce best practices.

Calgary - 07:00 MST

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Copyright Litigation and the Risk of Double Costs

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By Richard Stobbe

An American photojournalist, Ms. Leuthold, was on the scene in New York City on September 11, 2001. She licensed a number of still photographs to the CBC for use in a documentary about the 9/11 attacks. The photos were included in 2 versions of the documentary, and the documentary was aired a number of times betwen 2002 and 2004. We originally wrote about this in an earlier post: Copyright Infringement & Licensing Pitfalls. The court found that the CBC had infringed copyright in the photographs in six broadcasts which were not covered by the licenses. Though Leuthold claimed damages of over $20 million, only $20,000 was awarded as damages by the court.

In Leuthold v. Canadian Broadcasting Corporation, 2014 FCA 174, the Federal Court of Appeal upheld an award of double costs against Leuthold. Early in the litigation process, the CBC had formally offered to settle for $37,500 plus costs. Ms. Leuthold did not accept the CBC’s offer and went to trial where she was awarded $20,000. Ms. Leuthold’s total recovery was substantially less that the amount of the CBC’s offer. When this happens, a plaintiff can be liable under Rule 420 for double costs, which was awarded in this case. Double costs amounted to approximately $80,000 in these circumstances, which means Ms. Leuthold is liable for about 4 times the amount of the damage award. Although Ms. Leuthold objected that such a disproportionate costs award was “punitive”, the court concluded:

“The sad fact of the matter is that litigation produces winners and losers; that is why it is such a blunt tool in the administration of justice. But justice is not served by allowing persons who have imposed costs on others by pursuing or defending a claim which lacks merit to avoid the consequences of their behaviour. Such a policy would be more likely to bring the administration of justice into disrepute than the result in this case.”

For copyright litigation and licensing advice, contact the Field Law Intellectual Property & Technology Group.

Calgary - 07:00 MST

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Court Orders Google to Remove Site from Worldwide Search Results

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By Richard Stobbe

In a recent decision by the British Columbia courts (Equustek Solutions Inc. v Jack , 2014 BCSC 1063), Google has been ordered to de-index a website selling goods that were the subject of intellectual property (IP) infringement claims. While this may seem quotidian - after all, Google does comply with de-indexing requests on a regular and voluntary basis - this decision has broader implications for several reasons. This decision is the first Canadian decision to compel Google to delist a website after the so-called “right to be forgotten” case in the EU, and while that case involved personal privacy rights rather than IP rights, both cases have far-reaching implications for Google’s role in providing a practical remedy for an aggrieved party. This is a role that Google has resisted, but cannot avoid in light of its ever-expanding presence in the lives of individuals and the affairs of business.

The underlying dispute involved a trade-secret misappropriation and passing-off claim by a manufacturer against a rival company. Specifically, the plaintiff Equustek alleged that a competing product known as GW1000 was an unauthorized knock-off, built using trade secrets of the plaintiff. The plaintiff Equustek won an initial order barring sales of the offending GW1000 product and then engaged in a time-consuming process of chasing the defendant to obtain some meaningful and practical remedy. This involved repeated requests to Google to block hundreds of specific individual webpages and URLs from Google Canada search results, a game that the court described as “whac-a-mole”. Finally the plaintiff sought an order compelling Google to de-index the defendant’s sites from all Google search results worldwide. The resulting order is important for a number of reasons:

  1. In order to make its order, the court had to assert jurisdiction over Google Inc. rather than the Canadian subsidiary Google Canada. In coming to this decision, the B.C. court relied in part on the EU “right to be forgotten” case. Interestingly, the court commented that the California choice-of-law clauses in Google’s various user agreements and advertising contracts did not prevent the Canadian court from asserting jurisdiction. This is due to the fact that this dispute did not arise out of any contract-related claims. Rather, the court found that it had scope to make an order (with extra-territorial reach) over Google (a non-party) under its inherent jurisdiction under the Law and Equity Act.
  2. The court also commented on the fact that Google is not merely a passive site, but rather it conduct active and ongoing business with British Columbia companies and individuals.
  3. The court found that blocking individual URLs was not as effective as blocking so-called “mother sites”. In effect, the court agreed that Google’s current practice of voluntarily complying with individual requests to block specific URLs does not provide an effective remedy. This will certainly be cited in future website blocking cases.
  4. Regarding Google’s role, the court commented that “Google is an innocent bystander but it is unwittingly facilitating the defendants’ ongoing breaches of this Court’s orders. There is no other practical way for the defendants’ website sales to be stopped.”

After renewing the traditional criteria for assessing the merits of an injunction application, the court granted the order. Google is appealing this decision.

Calgary - 07:00 MST

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IT Contracts - Conference in Calgary

By Richard Stobbe

On October 14 and 15, 2014, I will be presenting on “Drafting IT Agreements” at the Essentials of Commercial Contracts (Calgary) Conference. This conference will discuss the legal and business framework of commercial contracts, negotiations and practical drafting tips.

The session on information technology (IT) contracting will review key considerations in IT licensing and service agreements, various models for licensing software, the overlap between licenses and service agreements, service level metrics and remedies for non-compliance, the use of  Statements of Work in IT agreements, as well as related issues: privacy, vendor lock-in, third party and open source software.

For more information, contact me or click on the link above.

Calgary - 05:00 MST

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An American Attorney in Canada (Part 2: Anti-Spam)

By Richard Stobbe

Canada and the USA. We enjoy the world’s longest undefended border… a border that unfortunately does not screen spam.

If you are an American attorney with US clients doing business in Canada, then you should be aware of a few things, like our lack of imaginative legislative acronyms, such as the CAN-SPAM Act (from Controlling the Assault of Non-Solicited Pornography And Marketing) (…or while we’re at, who can forget the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property (PROTECT-IP) Act, or the Enforcing and Protecting American Rights Against Sites Intent on Theft and Exploitation (E-PARASITE) Act).

Secondly, you should be aware that Canada’s incoming anti-spam law, known unimaginatively as CASL (Canada’s Anti-Spam Law) is coming into force next week, on July 1, 2014. Here are some pointers for US counsel:

  • Remember, an organization’s compliance with CAN-SPAM does not necessarily mean compliance with CASL. This is because of a number of important points of departure between the two laws. Canada’s law has been described as among the strictest internationally.
  • CASL broadly covers all “commercial electronic messages” and is not restricted to email, as is the case with CAN-SPAM. Thus, CASL is broad enough to capture text messages, social media messaging and other forms of electronic messages.
  • CAN-SPAM permits a “negative option” approach to consent, in which toggle consent boxes can be pre-clicked and the user has the ability to opt out by “un-clicking”. CASL prohibits such an approach and requires express consent with an opt-in mechanism.
  • Statutory penalties under CASL are more severe (up to $10 million for organizations, and up to $1 million for individuals), and the law also establishes a broader private right of civil action (which will come into effect in the future).
  • Lastly, CASL does provide for personal liability for directors and officers.

For more information on the application of this law to American businesses, contact Field Law.

Calgary - 07:00 MST

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Supreme Court of Canada on Internet Privacy

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By Richard Stobbe

The Supreme Court puts it mildly in its opening line: “The Internet raises a host of new and challenging questions about privacy.”

One of those questions is whether an IP address can be considered personal information. An internet protocol (IP) address is the unique numeric identifier of a particular computer and, in a wider sense, can be any node or point in the internet generally. In the recent case of R. v. Spencer, 2014 SCC 43, the Supreme Court of Canada (SCC) considered whether there is a reasonable expectation of privacy in ISP subscriber information including IP address information.

In this case, police identified the IP address of a computer that someone had been using to access child pornography.  Police approached the ISP and obtained the subscriber information associated with that IP address. At this point, no warrant was issued. This led them to the accused  and a warrant was issued for a search of his residence. The accused was charged and convicted. The SCC indicated that in this case, there was a reasonable expectation of privacy in the subscriber information, including the IP address.

Since the search of the subscriber info was obtained without a warrant, the search violated the Charter. While a warrant was eventually issued for a search of the accused’s residence, that warrant could not have been obtained without the original (warrantless, unconstitutional) search of the ISP subscriber information. Since the original search was unconstitutional, it follows that the search of the residence was also unconstitutional. This all leads to the exclusion of the evidence found at the residence.

Nevertheless, the SCC said that, even in light of all of the above points, the “police conduct in this case would not tend to bring the administration of justice into disrepute.”  The court concluded, in essence, that excluding the evidence would be worse than allowing that unconstitutional search. The admission of the evidence was therefore upheld.

A few key points to note:

  • Terms of Use and Privacy Policies are carefully reviewed and taken into account by the court in these cases.
  • In this case Shaw was the ISP. Shaw’s Privacy Policy said that “Shaw may disclose Customer’s Personal Information to: . . . a third party or parties, where the Customer has given Shaw Consent to such disclosure or if disclosure is required by law…”  The initial warrantless search by the police was not “required by law” (in the sense that it was merely a request and police had no way to legally compel compliance). This contributed to the court’s conclusion that there was a reasonable expectation of privacy on the part of the accused.
  • This contrasts with the decision by the Ontario Court of Appeal in R. v. Ward 2012 ONCA 660, where the court held that the provisions of PIPEDA were a factor which weighed against finding a reasonable expectation of privacy in subscriber information. That was another child pornography case. In that case, the ISP was Bell, whose terms said “[Bell Sympatico will] offer full co-operation with law enforcement agencies in connection with any investigation arising from a breach of this [Acceptable Use Policy].” There was no reference to disclosures “required” by law.  In that case, the accused has a subjective expectation of privacy, but that expectation was not objectively reasonable in light of his criminal activities.
  • Consider reviewing your privacy policies and your organization’s ability to disclose subscriber information in light of these decisions.

Calgary - 07:00 MST

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The Transitional Period & Implied Consent Under CASL

By Richard Stobbe

If the term “CASL compliance” is giving you a nervous twitch, you’re not alone. Many small and medium-sized businesses in Canada are scrambling to prepare for Canada’s Anti-Spam Law (CASL), whose official title says it all - especially the part about “efficiency and adaptability” (take a deep breath before you read “An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act“).

Two weeks from today, on July 1st, the first stage of the new law will come into force. The implied consent provisions in Section 66 create a transitional period.

For a period of three years after July 1, 2014, consent is implied for all “commercial electronic messages” (CEMs) if the sender and the recipient have a pre‐existing business or non-business relationship and that relationship previously included the exchange of CEMs.  Consent can be withdrawn by the recipient at any time during that three‐year period. Note that “commercial electronic messages”, “existing business relationship” and “existing non-business relationship” all have special definitions in the legislation.

While this transitional period only lasts for 36 months, it allows a sender of CEMs to rely on prior relationships that reach back in time. The regular implied consent provisions only permit a sender to rely on a two-year window - in other words, implied consent depends on an existing relationship during the two-year period before the CEM is sent (or only 6-months in some cases).

In recent information sessions, the CRTC has indicated that the Section 66 transition provisions do not impose those two-year or 6-month rules: ”So what Section 66 does is during that transition period of three years, the definitions of existing business relationship and existing non-business relationship are not subject to the limitation period, which are six months and two years that would otherwise be applicable. So in theory, if you meet the definition of existing business relationship or existing non-business relationship and there’s the communication of CEMs between the individuals, you could go back 25 years in theory.” [Link to transcript.]

Don’t think the transitional period lets you off the hook. Every organization should be preparing for CASL for a July 1st start date. If you need assistance on reviewing the scope of your obligations, how the law applies, and how the transitional provisions might apply to your organization, contact us.

Calgary - 07:00 MST

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An American Attorney in Canada (Part 1: Copyright)

By Richard Stobbe

Okay, so maybe it’s neither as romantic as Gershwin’s “An American in Paris“, nor as historical as Mark Twain’s “A Connecticut Yankee in King Arthur’s Court,” but many US lawyers do find themselves facing legal issues in Canada. US practitioners who deal with Canadian legal matters must take note of a few common pitfalls. In this series, we review some of the most common misconceptions and flag a number of important tips in the area of cross-border intellectual property law:

  • Copyright Law - both countries are party to the Berne Convention for the Protection of Literary and Artistic Works and both copyright regimes cover the same basic categories of protection. In Canada, the Copyright Act protects original literary works, dramatic works (including choreographic works), musical and artistic works, computer programs, performances, sound recordings and communication signals. The scope of protection the USA is roughly the same.

.       A few tips on copyright:

  • The term of protection in Canada the life of the author plus 50 years. In the US, the term of copyright is based on the author’s life plus 70 years. There are variations that will impact the duration of protection, but that important distinction is worth noting.
  • If a work is protected by copyright in Canada, it can benefit from protection in the US under the Berne Convention, and vice versa.
  • Under the American DMCA, a notice-and-takedown system was implemented for the treatment of copyright infringement claims online. In recent amendments to the Canadian Copyright Act, a so-called notice-and-notice regime has been created. While these provisions are not in force, they are expected to be in force in January 2015.  Once implemented, a notice of online infringement would trigger an obligation to pass along notice of infringement, but not necessarily an obligation to takedown the allegedly infringing material. Under this system, there are penalties for failure to forward the notice of infringement.
  • The concept of “works made for hire” does not appear in the Canadian Copyright Act. Employers in Canada, or US employers of Canadian employees, can rely on a provision (Section 13(3)) which stipulates ownership of works that are created in the course of employment are owned by the employer.
  • Joint ownership of copyright is handled differently in Canada and the US - let’s use software as an example. In Canada, generally speaking, a co-owner of copyright cannot license the rights to the software without the consent of the other co-owner, whereas in the US, a co-owner can license without consent.

For advice on cross-border intellectual property issues, contact Canadian counsel at Field Law.

Calgary - 07:00 MST

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Intellectual Asset Management Best Practices – Part 1

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By Richard Stobbe

Does your organization have “intellectual assets”? Regardless of what your organization does – whether it is a service-based business, or in the manufacturing sector, whether it is driven by cloud-based software or bricks-and-mortar locations, whether it is a multinational or a local start-up – chances are good that you can start to list the intellectual capital that has value in your organization. What do we mean by “intellectual assets”? There are many definitions, but one broad definition is simply “knowledge that has value in your organization”, and it can encompass:

  1. Human know-how and intellectual capital – the unwritten expertise, experience, concepts and technical knowledge that employees have in their heads; and
  2. Intellectual assets, including registered and unregistered intellectual property (IP) – this includes the codified or “captured” knowledge that adds to your organization’s value, such as trade secrets that might be captured in internal processes, manuals, design specifications, software source-code and other unpublished know-how, as well as the value represented by:
    • Patents (including Canadian and international applications and issued patents);
    • Copyright-protected works (including published and unpublished written works);
    • Trademarks (including logo designs, registered and common law marks);
    • Industrial designs, and other forms of registered intellectual property.

Some organizations are better at managing and obtaining value from their intellectual assets. What are the best practices for the management of these assets? In this series, we’ll review current best practices for management of intellectual assets as a competitive tool. Experts in the area of intellectual asset management have identified several layers or tiers of sophistication in the handling of such assets. Therefore, while a start-up inventor may certainly learn from the approach of Apple, Inc., each organization must look at best practices from the perspective of their organization, their resources and their stage of development. As a starting point, the following three steps lay the groundwork for future steps of IP management and value creation:

1: Conduct an Audit

The first step in any organization that is new to intellectual asset management is to conduct a review of existing assets. This is also a great exercise for organizations whose IP portfolio may be evolving – perhaps through recent growth, acquisitions, internal research and development (R&D) or divestiture. This step seeks answers to issues such as:

  • What does the organization own, and what is merely licensed? What are the gaps in intellectual assets?
  • Review unpatented inventions, patent applications, issued patents.
  • Review software developed by or for the organization.
  • Identify trade-secrets, focusing on non-public information that adds specific value to the organization, including intangibles such as customer lists, processes, early-stage prototypes, and strategic plans.
  • What non-disclosure agreements or confidentiality obligations has the organization agreed to?
  • Is the organization party to any IP licenses (in- or out-licenses)? Are there any co-development or joint venture agreements that involve IP creation?
  • Identify the organization’s trademarks, logos and brands. Note registered and unregistered marks in use by the organization in different jurisdictions.

This audit or portfolio review process may start as a simple list, and may evolve into a more detailed table or spreadsheet. It may involve more sophisticated tracking systems which are maintained with IP counsel, to track patent maintenance fees and deadlines.

2: IP Education

An organization must also educate its personnel on the strategic importance of intellectual property within the organization.

This is a process of raising awareness and providing education about the different types of intellectual property and the organization’s policies related to these assets. This must involve the leadership of the organization and it may even trickle down to “front line” personnel. It should involve the integration of intellectual property strategy into overall business strategy, or if that IP strategy is already in place, it may involve internal education sessions and policies, such as confidentiality and invention disclosure policies. In some cases, it involves a process of educating professional advisors about the strategic role of IP in the organization.

IP counsel can play an important role to provide education, and to be a resource for developing internal policies, reviewing agreements, and drafting contractual provisions.

3: Implementing “Make versus Buy” Decisions

The next step can certainly happen in tandem with the other steps of IP portfolio analysis, and IP education. Many organizations are continuously innovating in their industry as they seek to gain and maintain their competitive advantage. However, not all organizations have the capacity to innovate internally. A medium-sized company may not have the R&D strength of its competitor, but it may still use strategic decisions to leverage the value of intellectual assets and gain an edge over competitors. Ultimately, the decisions on how to innovate involve a “make versus buy” decision. Through a screening process, an organization can weigh the various factors that influence its decision to pursue an innovation opportunity. At this stage, the organization is looking at factors such as:

  • Are ideas and inventions emanating from within the organization? This is certainly enhanced when the IP education and awareness is part of the organization’s culture.
  • What is the value of these ideas and inventions, as against the cost of developing the idea to a commercial product?
  • Is this a core or non-core function for this organization?
  • Is it more cost-effective for the organization to internally develop this as a product or innovation, to pay someone else to develop it, or to license it in from another company?
  • If it is internally developed, is IP protection available, and what type of protection will it be? Is it eligible for patent protection?

Here is one example of how these different pieces may fit together:

Let’s say an organization has reviewed and listed its trade secrets during an intellectual asset audit. In the course of this process, it learned that trade secrets formed an important part of the organization’s competitive advantage, but there was a lack of any internal confidentiality policies, nor was there any invention or idea disclosure process. With the help of counsel, it developed an internal confidentiality policy, as well as a modest reward system for idea disclosures. The CEO directed IP counsel to provide a lunch-and-learn session for employees, including those in the sales team. Employees were educated about their role in the organization’s value-chain, and the importance of maintaining secrecy over confidential information and innovative ideas. After the education sessions, someone in sales came forward to describe an idea for product improvement based on recent feedback from customers. This idea was filtered through the company’s “make versus buy” decision process, leading to a product improvement which was determined to be patentable. This patentable improvement blocked competitors from adopting this product change. The company’s confidentiality policy emphasized the importance of maintaining secrecy over the improvement until the patent application was filed and the product improvement was released for sale.

To discuss the importance of intellectual assets within your organization, contact Richard Stobbe in our Intellectual Property and Technology Group.

Calgary - 07:00 MST

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Risk Management - a roundtable discussion

Field Law sponsored the Canadian Lawyer magazine’s in-house general counsel roundtable, moderated by Jennifer Brown: see this link. The participants - from the University of Calgary and technology-driven companies Pason Systems Corp. and Trican Well Services - discuss how risk management is addressed in their organizations.

Calgary - 07:00 MST

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Innovation in Canada

By Richard Stobbe

A recent survey of the top patent producing corporations in Canada (see this link, courtesy of our colleagues at IPPractice.ca) shows a few interesting trends:

  • Despite its fall from grace over the past 4 or 5 years, BlackBerry remains among the top innovators in the country.
  • The top five patentees in Canada all make a significant investment in departments that focus on purely on research and development (R&D):
    • BlackBerry (419 patents),
    • Qualcomm (329 patents),
    • Schlumberger (183 patents),
    • Procter & Gamble (164 patents),
    • LG Electronics (147 patents)
  • Innovators in the oil-and-gas/energy sector are not leading the pack, but are well-represented in the top tier: Schlumberger (183 patents), Baker Hughes (121 patents) and Halliburton Energy Services (105 patents), all of whom provide services to companies in the extraction / production sector.
  • Innovation in mature consumer sectors - led by BlackBerry, Qualcomm, Procter & Gamble, LG Electronics, General Electric, Microsoft and Honda - is typically incremental in nature. This is a sector where protection for incremental improvements (as opposed to quantum leaps forward) can play an important role in maintaining a competitive edge.

Review your patent strategy with the Field Law Intellectual Property and Technology Group.

Calgary - 07:00 MT

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A “Right to be Forgotten” in Canada?

By Richard Stobbe

A recent EU decision by the Court of Justice of the European Union (CJEU) has generated a lot of press since it involves a high profile company - Google - and a tantalizing concept of a “right to be forgotten”. The story stems from the efforts by a Spanish man to compel Google to remove search results that referred to the man’s prior financial history - in fact the references were to bankruptcy-related notices published by a Spanish newspaper years earlier. The online newspaper publication remains in place, but the CJEU’s decision touches on the indexing and display of the results in a Google search, which refer back to that online newspaper publication.

So what does this mean for Canada?

There has, as far as I am aware, no equivalent privacy-related decision relating to removal of search results by search engines in Canada. However, there are analogous rights in Canada for individuals to compel an organization to correct or delete personal information. And that would apply to the organization that has “collected, used or disclosed” the personal information.

In Canada, PIPEDA does contemplate the correction of personal information, the withdrawal of consent, and the deletion of personal information that has been collected. Those provisions still require the individual to make a request or a complaint in order to get a remedy.

In that sense the EU organization (in the EU context) in Google’s position then has to decide on the merits of that request or complaint, so the “right” may be subject to the interpretation of these subjective questions by a Google employee, considering all the different criteria that the EU decision has listed.

In Canada (in the PIPEDA context), the organization does not have to make the same kinds of assessments or value judgements - the question is simply whether the individual is withdrawing consent, or correcting information.

In the EU, the organization has to decide if “in all the circumstances” the info appears to be “inadequate, irrelevant or no longer relevant, or excessive” which requires the exercise of a lot more judgement. And more scope for disagreement.

How this is handled by Google, and how it may influence Canadian decisions on requests for removal of personal information, remains to be seen.

Calgary - 07:00 MST

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Industrial Design as a Competitive Tool

By Richard Stobbe

Industrial design law in Canada protects the visual features of shape, configuration, pattern or ornamentation which are applied to a product. Functional elements are not protected.

Think of the unique shape of a bottle. The functional elements - such as a handle, a cap or lid - those elements could not be protected by industrial design, but design elements like a curved neck, or say a ridged pattern or other ornamental features could be protected.

If the article or product has been “published” (i.e., it’s been made public or offered for sale or use) then it won’t be eligible for protection. However, if the product or article has been “published”, there is a 12 month grace period in which to obtain registration. So timing is important and protection can be lost if the product launch is not coordinated with IP rights protection.

For protection under the Industrial Designs Act, registration is required, and lasts for 10 years from the date of registration. Note that at the five year point, a maintenance fee is required. After the expiry of the 10-year term, the design is available for anyone in Canada to make, import, rent or sell.

Some points to consider for the use of industrial design law as a tool for strategic IP protection:

  • industrial designs (also known as a design patent in the US) can be a perfect fit for companies selling manufactured consumer goods and packaged goods, but can also be a competitive tool for service companies who are trying to protect a product or device that is used or sold as part of a service offering
  • industrial design can help fill in the gaps between utility patents, trademarks and copyright
  • when considering protection, focus on features that would distinguish your product from competitors, and features that competitors or knock-off infringers would want to copy in order to mimic your products
  • the scope and period of protection is much narrower than the scope of a utility patent, but it can be a very useful tool, and much more cost-effective means of obtaining protection in the right circumstances.

Talk to experienced IP counsel for advice on exploring the possible advantages of industrial design law for your organization.

Calgary - 07:00 MDT

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Update on Anti-Patent-Troll Laws

By Richard Stobbe

Yesterday draft “anti-patent-troll” legislation was put forward in Washington. This is part of a ground swell of opposition to illegitimate patent demand letters from so-called patent assertion entities (PAEs), or “patent trolls”. This draft legislation, according to the sponsor of the proposed bill, “increases transparency and accountability to help expose and prevent fraudulent infringement claims. It would require patent demand letters to include certain basic information to help companies determine whether a letter is legitimate.”

See more at: this link

This proposed law approaches the issue from a consumer protection angle, using Federal Trade Commission (FTC) authority and state Attorney General authority for enforcement.

Another anti-patent-troll bill passed by the US House in 2013 is now stalled in the Senate. Congress may be stalled but the fact that patents are within federal jurisdiction has not prevented state legislatures from passing consumer-protection laws which target PAEs. I attended a lunch yesterday at which the Attorney General of Vermont spoke about his state’s efforts to deploy state-level consumer protection laws against PAEs. A case involving a well-known PAE by the name of MPHJ Technology is currently before the Vermont courts. The debates and the legislative responses are far from over.

Do we need anti-patent troll laws in Canada?

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API Copyright Update: Oracle wins this round

By Richard Stobbe

The basic question “are APIs eligible for copyright protection?” has consumed much analysis (and legal fees) during the lawsuit between Oracle and Google, which started in 2010. (For more reading on our long-running coverage of the long-running Oracle vs. Google patent and copyright litigation, see below.)

The basic premise of Oracle’s complaint against Google is that the wildly popular Android operating system copied 37 Java API packages verbatim, and inserted the code from those APIs into the Android software. This copying was done without a license from Oracle. Therefore, says Oracle, copyright infringement has occurred. In a 2012 decision, the district court decided that the Java APIs were not subject to copyright protection. Therefore, said the lower court, there was no infringement. The US Federal Court of Appeals has reversed that finding.

In a 69-page decision released on May 9, 2014, the appeal court has decided that these Java APIs are subject to copyright protection, and concluded as follows: “Because we conclude that the declaring code and the structure , sequence, and organization of the API packages are entitled to copyright protection, we reverse the district court’s copyrightability determination with instructions to reinstate the jury’s infringement finding as to the 37 Java packages . Because the jury deadlocked on fair use, we remand for further consideration of Google’s fair use defense in light of this decision.”In short, Google has infringed Oracle’s copyright, and the question to be determined now is whether Google has a “fair use” defense to that infringement.

The EFF has called the decision dangerous since it exposes software developers to copyright infringement lawsuits. However, for software vendors, it may help strengthen the controls they place on developers to maintain standards and cross-compatibility through licensing. After all, that was (in theory) one of the complaints raised by Oracle - that its “write once, run anywhere” Java principle was violated when Google mis-used the Java APIs to essentially bring Android out of compatibility with the Java platform.
Related Reading:

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Use of ADR in Technology Transactions

By Richard Stobbe

A recent WIPO Survey assessed the use of alternative dispute resolution (ADR) clauses in various technology transactions, and the results make for interesting reading for anyone who is in the business of negotiating technology deals. The goal of the survey was to establish trends in the use of ADR to handle technology-related disputes, and almost 400 participants from 62 different countries participated. A few takeaways:

  • Overall, the use of ADR clauses appears to be on the increase, as compared to the use of litigation in court.
  • Almost all of the respondents (94%) indicated that dispute resolution clauses are the subject of contract negotiations. In other words, negotiators are paying attention to these clauses, and not merely defaulting to the clause that is proposed by the other side, or comes with the precedent agreement.
  • Respondents were asked to estimate the percentage of their technology-related agreements that led to disputes. The results were:
    • License Agreements (25% of Respondents)
    • R&D Agreements (18% )
    • NDAs (Non-Disclosure Agreements) (16%)
    • Settlement Agreements (15%)
    • Assignments (13%), and
    • M&A Agreements (13%).
  • The most common dispute resolution clauses according to respondents were:
    • Court litigation (32%)
    • Arbitration (30%)
    • Mediation (12%)
    • Multi-tier clauses (17% of all clauses) in which mediation is deployed prior to court litigation, arbitration or expert determination.
  • Regarding time and cost, the estimates of respondents were as follows, and remember there are averages, and most would involve patent international disputes:
    • Court litigation (home jurisdiction) took approximately 3 years; and amounted on average to US$475,000
    • Court litigation (foreign jurisdiction) took on average 3.5 years; and amounted to US$850,000.
    • Arbitration was shorter, at 1 year; the cost added to US$400,000.
    • Mediation was shortest, at 8 months, and 91% of Respondents indicated that mediation costs were under US$100,000.
    • Interestingly, 25% of respondents indicated that “management time of business executives and wasted time of other participants in proceedings, lost productivity and lost business opportunities” represented important factors when assessing the costs of dispute resolution.

See: FULL PDF REPORT: Results of the WIPO Arbitration and Mediation Center International Survey on Dispute Resolution in Technology Transactions

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Are you a Canadian business running an #onlinecontest?

Social media is not just a marketing novelty - it has become the essential tool for running a promotional contest. Have a look at any big brand contest and you’re hard pressed to find one without a social media component. Many Canadian businesses also seek to extend their reach into the US market through promotional contests.

If you are in that category, take note of this recent FTC action against shoe-maker Cole Haan. At the conclusion of their investigation, the FTC warned that the structure of the contest was misleading to consumers since it employed contestants to create Pinterest boards using the #wanderingsole tag, which turned these pins into endorsements for Cole Haan products (…which was the whole point of the contest…). However, FTC rules are clear that the connection between endorsers and marketers should be made clear. While no penalty was levied against Cole Haan, this letter has served as notice to the rest of the industry that the FTC will be watching such contests to ensure that these endorsements are made sufficiently clear.

In Canada, the Competition Bureau oversees false and misleading advertisements, including the apparent endorsement of products by paid endorsers.

The business lessons are clear: a successful social media contest can back-fire if you get more publicity from an FTC or Competition Bureau investigation than from the contest. Not to mention potential penalties. Get advice on your social media policy and contest rules before you launch the next campaign.

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