McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca

Barry B. Sookmanbsookman@mccarthy.ca / 416-601-7949

Toronto Computer Lawyers GroupThe Year in Review: Developments in Computer, Internet and E-Commerce Law (2011-2012)

June 21, 2012

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Outline

¬ Electronic Contracting

¬ Other Contract Issues

¬ Jurisdiction and E-Commerce

¬ Privacy

¬ Canada’s Anti-SPAM Law (CASL)

¬ Liability for Automated Processes

¬ Social Media Issues

¬ Patent, Trade-Secret and Trade-Mark Issues

¬ Copyright

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Electronic Contracting

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Kraft Real Estate Investments, LLC v Homeway.com, Inc. 2012 WL 220271 (D.S.Car. Jan 24, 2012)

¬ Enforcement of TOS referenced in hyperlink to clickwrap.

¬ HomeAway.com implemented a "click-through" process on each of its websites. Under this procedure, before an advertiser could list or renew a property listing, she was required to affirmatively click a box reflecting agreement to the terms and conditions posted on the website. These terms and conditions were available to the advertiser via a hyperlink located directly below the "I Agree" check box.

¬ “Importantly, nowhere in Knopff's testimony does she affirmatively testify that she did not click the "I Agree" box when listing or renewing listings. While she averred that she did not recall any terms and conditions being posted on any of the websites, she never testified that she did not click the "I Agree" box. This testimony is not sufficient to defeat a motion for summary judgment when undisputed evidence establishes that she necessarily would have clicked this box in order to place or renew the listings.”

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Kraft Real Estate Investments, LLC v Homeway.com, Inc. 2012 WL 220271 (D.S.Car. Jan 24, 2012)¬ Some listings were contracted for before the clickwrap process was in place.

This “browsewrap” was not enforced.

¬  “Although the terms and conditions were posted on the website at this time, because visitors were not required to assent to them, they would constitute a "browsewrap agreement.“...Most courts analyzing the enforceability of the terms and conditions of browsewrap contracts focus on whether the user had actual or constructive knowledge of the terms and conditions such that their use of the website can constitute assent to the terms. 

¬ In this case, the record reflects only that when initially posted, the terms and conditions were available via a hyperlink posted on the home page of the websites. However, the record does not contain any information as to the size of the font of the hyperlink or the language used to alert the website users to the terms and conditions. As Knopff averred that she has never read the terms and conditions, this would suggest that she did not have actual knowledge of these terms and conditions at this time. Therefore, the Court cannot conclude that the terms and conditions were binding on Knopff by virtue of the browsewrap agreement in place at the time the listings were initially posted on A1 Vacations.”

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Swift v. Zynga Game Network, Inc., 805 F.Supp.2d 904, (N.D.Cal., 2011)¬ Enforcement of TOS referenced in hyperlink to “modified” clickwrap

¬ The first time that a user such as Plaintiff decided to start playing a Zynga game through a social media platform such as Facebook, he or she was presented with a screen request stating: "Allow Access? Allowing YoVille access will let it pull your profile information, photos, your friends' info, and other content that it requires to work." Underneath, there is a large "Allow" button, a smaller "cancel" link, and smaller grey font stating “... By using YoVille, you also agree to the YoVille [blue hyperlink] Terms of Service.”

¬ “Plaintiff's argument that she was not provided with sufficient notice of the contractual terms she was assenting to because of Zynga's modified clickwrap presentation, and therefore is not bound by any arbitration provision, fails in light of recent caselaw holding that clickwrap presentations providing a user with access to the terms of service and requiring a user to affirmatively accept the terms, even if the terms are not presented on the same page as the acceptance button, are sufficient.”

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Fteja v. Facebook, Inc., 2012 WL 183896 (S.D.N.Y. 2012)

¬ Enforcement of TOS referenced in hyperlink to hybrid browserwrap, clickwrap.

¬ “By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service." The phrase "Terms of Service" is underlined, an indication that the phrase is a hyperlink, a phrase that is "usually highlighted or underlined" and "sends users who click on it directly to a new location—usually an internet address or a program of some sort.“

¬ “Thus Facebook's Terms of Use are somewhat like a browsewrap agreement in that the terms are only visible via a hyperlink, but also somewhat like a clickwrap agreement in that the user must do something else—click "Sign Up"—to assent to the hyperlinked terms. Yet, unlike some clickwrap agreements, the user can click to assent whether or not the user has been presented with the terms.”

¬ “the Court concludes that Fteja assented to the Terms of Use and therefore to the forum selection clause therein. If that is so, Fteja agreed to litigate all disputes regarding his Facebook account "exclusively in a state or federal court located in Santa Clara County,”

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Grosvenor v. Qwest Corp., 2012 WL 602655 (D.Colo., 2012) 

¬ Enforcement of TOS referenced in hyperlink to clickwrap during software installation.

¬ “Several cases have concluded that where, during a software installation, the user is presented with the text of an agreement in a scroll box and required the click a button expressing assent to those terms before installation continues, a contract is formed.  Rarer are cases in which, rather than presenting the terms of the agreement in a scroll box, the installation software directs the user to the terms of the agreement through a link to a different location... Nevertheless, the reasoning in "scroll box" cases applies with equal force where, rather than scrolling through an agreement's terms in a text box, the user can review the license terms by following the tendered link.”

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Grosvenor v. Qwest Corp., 2012 WL 602655 (D.Colo., 2012) ¬ “There are two facts that are unique to this scenario. First, Mr. Grosvenor could not

review Qwest's terms of service simply by clicking on the link www.qwest.com/legal; doing so would have only taken him to a page where he would have to continue to search for a link to the applicable contractual terms. The Court cannot say that, as a matter of law, requiring a user to navigate through two links in order to review the terms of an offer prevents any contractual formation, each additional step required of the user tips against a finding that the terms were sufficiently conspicuous. Second, and perhaps more importantly, the fact that a user must navigate to a web page in order to ascertain terms of an offer is particularly difficult where the software being installed is the means by which the internet can be accessed. In the absence of some other means of accessing the internet, Qwest's program did not allow Mr. Grosvenor to go to www.qwest.com/legal or review the applicable documents.... Under these circumstances, where there is no assurance that a user could view the operative terms prior to agreeing to them. Thus, despite the representations made as to the effect of pressing the "I Accept" button, the Court has some doubt that doing so created an enforceable contract.” (emphasis added)

¬ Note: installation process plus a welcome letter were sufficient to obtain assent to an arbitration clause.

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One beacon Insurance Company v Crowley Marine Services, Inc. 648 F.3d 258 (5th.Cir.2011)¬ Enforcement of TOS on websites incorporated by reference in other contracts.

¬ “THIS RSO [Repair service Order] IS ISSUED IN ACCORDANCE WITH THE PURCHASE ORDER TERMS & CONDITIONS ON WWW.CROWLEY.COM / DOCUMENTS & FORMS, UNLESS OTHERWISE AGREED TO IN WRITING.”

¬ “The terms and conditions referred to in the RSO were located on a subpage of Crowley's website. The terms and conditions could not be accessed by typing "www.crowley.com / documents & forms" into a web browser. The district court found that "www.crowley.com / documents & forms" was not intended to be a web address indicating the exact location of the page containing the terms and conditions, but merely provided directions to assist in locating the terms and conditions on Crowley's website.”

¬ “Under general contract principles, where a contract expressly refers to and incorporates another instrument in specific terms which show a clear intent to incorporate that instrument into the contract, both instruments are to be construed together....We see no reason to deviate from these principles where, as here, the terms to be incorporated are contained on a party's website...

¬ Although Crowley undoubtedly could have provided clearer directions to the location of the terms and conditions on the website, we agree with the district court that notice of the terms and conditions was reasonable under the particular facts of this case.”

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Crabb v Go Daddy.com, Inc 2012 WL 4479043 (D.Ariz. Sep. 27, 2012)

¬ Problems with incorporating terms by reference.

¬ Dispute over whether GoDaddy had right to “park” domain names on pages with advertising under a Parked Page Service Agreement that was incorporated by reference into GD’s Universal Terms of Service.

¬ “A careful customer reading the Universal Terms of Service would have no reason to suspect that the Domain Registration Agreement and the Parked Page Service Agreement always go together. The Universal Terms of Service informed customers that specific agreements would apply when specific services were purchased. It did not clearly and unequivocally inform customers which agreements applied to which services. It did not notify customers that certain unrequested "services" would be bundled with requested services. In particular, it did not communicate that the Parked Page Service Agreement applies to anyone registering a domain name.

¬ As a matter of law, the Terms of Service did not clearly and unequivocally inform Plaintiffs that the Parked Page Service Agreement was among those agreements incorporated by reference when Plaintiffs purchased domain name registration from Go Daddy.”

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Jerez v JD Closeouts, LLC 2012 WL 934390 (N.Y.Dist.Ct. 2012)

¬ Are TOS posted on a website binding?

¬ Plaintiff ordered goods by email. The defendant’s website contains the "Terms of Sale" on its "About Us" page. The "Terms of Sale" has a hyperlink that directs the viewer to the terms of all sales, including disclosures, return policy and legal policy.

¬ “Assuming, without deciding, that the conspicuous placement of such terms of sale on the website of an internet merchant would be sufficient even in cases where the transaction arose from an email solicitation, defendants' "terms of sale" were "submerged" too deeply to become a binding part of any sale agreement...

¬ In closing, this Court reiterates that forum selection clauses are prima facie valid when a party can show that the clause was incorporated into the parties' contract. However, e-commerce merchants cannot blithely assume that the inclusion of sale terms, listed somewhere on a hyperlinked page on its website, will be deemed part of any contract of sale.”

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Kwan v Clearwire Corp. 2012 WL 32380 (W.D. Wash. Jan 3, 2012)

¬ Are TOS referenced in an email confirmation binding?

¬ “Clearwire asserts that Ms. Brown assented to its TOS both (1) by using her modem after having received the confirmation email which noted the TOS on its website and then retaining the modem for six months, and (2) by clicking on its "I accept terms" web-button prior to accessing the internet on her modem...

¬ The confirmation email did not contain a direct link to Clearwire's TOS, but rather a link to Clearwire's homepage. To find the TOS, Ms. Brown would have had to negotiate her way through two more hyperlinks. Further, the reference to the TOS did not appear until the third page of the email Ms. Brown received. Like the court inSpecht, this court finds that the breadcrumbs left by Clearwire to lead Ms. Brown to its TOS did not constitute sufficient or reasonably conspicuous notice of the TOS. Accordingly, the court declines to hold that Ms. Brown manifested assent to the TOS based on her receipt of Clearwire's email and retention of the modem alone.”

¬ “the same day that Clearwire asserts that Ms. Brown clicked on the "I accept terms" button, a Clearwire technician visited her home, while she was not there, to check the modem connection. The parties have expressly stipulated that a material issue of fact exists with respect to whether or not Ms. Brown ever clicked Clearwire's "I accept terms" button.”

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Liberty’s Syndicates at Lloyd’s v Walnut Advisory Corp 2011 WL 5825777 (D.NJ. Nov 16, 2011)

¬ Problems with incorporating terms by reference where there is an existing agreement.

¬ Parties had an implied by fact contracts (Binding Authority Contracts or BOCs). One party argued that other terms (Terms of Business Agreements or TOBAs) applied based on (1) emails containing hyperlinks and reference to the TOBAs, and (2) instructions located on their client website/extranet.

1. “In the present case, the hyperlinks and references in Miller's emails most closely resemble the terms and conditions in those browsewrap agreements that courts have declined to enforce. The Court finds that these notifications, like the terms and conditions listed on a submerged portion of a webpage in certain browsewrap agreements, were insufficient to provide adequate notice of the TOBAs.”

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Liberty’s Syndicates at Lloyd’s v Walnut Advisory Corp 2011 WL 5825777 (D.NJ. Nov 16, 2011)

2. “When Walnut first accessed the client website/extranet, the implied contract between Walnut and Miller was already in effect... Because the relationship between Walnut and Miller was not limited to the bounds of Miller's client website/extranet, the forum selection clause referenced in the website terms did not provide fair notice...Thus, the notice provided by Miller's website/extranet was insufficient to notify Walnut of the effect of the website's contractual terms on Walnut and Miller's existing contractual relationship.”

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Lebowitz v Dow Jones & Co, Inc 2012 WL 795525 (S.D.N.Y. Mar. 12, 2012)¬ Enforceability of right to unilaterally change services.

¬ “On its face, the Subscriber Agreement expressly permits Dow Jones to discontinue or change services (defined to include BOL) or their availability at any time. Plaintiffs argue that such an interpretation of the contract renders it meaningless because it would eliminate the requirement of consideration or performance on the part of Dow Jones. Yet it is well-settled that "the courts will not adopt an interpretation that renders a contract illusory when it is clear that the parties intended to be bound thereby.”

¬ “In this case, there is no evidence that Dow Jones used the discontinuance provision to deprive plaintiffs of an unreasonably large part of WSJ Online's content, and there is no reason to interpret this provision as permitting such extreme behavior. Dow Jones acted reasonably, and therefore this provision of the Subscriber Agreement is not illusory. Dow Jones discontinued access to BOL content in accordance with the contract.”

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VS Technologies, LLC v Twitter Civil Case No. 2:11cv-43 (E.D.Virg.Jun 28, 2011)¬ Use of TOS to obtain jurisdiction in a patent infringement case.

¬ “Finally, with the growth of the social networking industry, the Court hesitates to establish precedent that would potentially foster satellite litigation in every patent case involving a social networking market participant. Should this Court decide that a social networking market participant can limit the forum in which it can be sued for patent infringement via Terms of Service governing "access to and use of that social networking market participant's website and services”, foreseeably, other District Courts in similar cases will be called upon to decide, inter alia, whether other plaintiffs' employees ever agreed to online Terms of Service, whether those employees could bind their plaintiff employers to those Terms of Service, whether those Terms of Service contained a forum selection clause, whether any such forum selection clause was enforceable, and, as the Court is asked to decide here, whether that forum selection clause contemplated coverage of patent infringement claims. The Court refuses to set this precedent.”

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EKD v Facebook, Inc, Civil No. 11-461 GPM. (S.D.Ill.Mar.8, 2012)

¬ Enforcement of Facebook “webwrap” TOS against minor suing over Facebook’s sponsored stories (a form of paid advertisement that appears on a facebook.com user's profile page consisting of another friend's name, profile picture, and an assertion that the person "likes" the advertiser”).

¬ “As California law recognizes also, however, "the disability of infancy [is not] a `sword' rather than a `shield...The infancy defense may not be used inequitably to retain the benefits of a contract while reneging on the obligations attached to that benefit.”

¬ “In the specific context of forum-selection clauses, courts, including California courts, have readily declined to permit minors to accept the benefits of a contract, then seek to void the contract in an attempt to escape the consequences of a clause that does not suit them.”

¬ “Plaintiffs have used and continue to use facebook.com. The Court concludes that Plaintiffs cannot disaffirm the forum-selection clause in Facebook's TOS, although Plaintiffs were minors when they entered the agreement containing the clause.”

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Duick v. Toyota Motor Sales, U.S.A., Inc. 198 Cal.App.4th 1316 (2011)¬ Enforcement of a clickwrap agreement obtained by fraud.

¬ “It is unsurprising, of course, that the terms and conditions were drafted in such a way as to conceal from Duick the true nature of the conduct to which she was going to be subjected—Duick was undisputedly the target of a prank, and it would make no sense for the pranksters to warn the target in advance. Our conclusion that the contract is void because of fraud...is based solely on the following propositions: (1) defendants were the drafters and creators of the relevant Web pages, including the full text of the terms and conditions; (2) by drafting and presenting the terms and conditions as they did, including the use of the phrase "Personality Evaluation," defendants misrepresented and concealed (whether intentionally or not) the true nature of the conduct to which Duick was to be subjected; and (3) Duick was not negligent in failing to understand the true nature of the conduct to which she was to be subjected, because no reasonable person in her position would have understood it...

¬ we conclude that defendants deprived Duick of a reasonable opportunity to know the character of the proposed contract. The contract is consequently void because of fraud in the inception, and every part of it is therefore unenforceable, including the arbitration provision.”

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Simonoff v Expedia, Inc, 643 F.3d 1202 (9th. Cir.2011)

¬ Venue clauses: “of a state” v “in a state”.

¬ “the phrase "the courts of" a state refers to courts that derive their power from the state—i.e., only state courts—and the forum selection clause, which vested exclusive jurisdiction in the courts "of" Virginia, limited jurisdiction to the Virginia state courts.”

¬ “By way of contrast, however, we observed in Doe 1 that a forum selection clause referring to "courts in" a state imposes a geographic limitation, not one of sovereignty. The word "in" means to "`express[ ] relation of presence, existence, situation, inclusion ...; inclosed or surround by limits, as in a room.'“ Hence the phrase "courts in" a state includes any court within the physical boundaries of the state, even if the court does not derive its power and authority from the sovereignty of the state. In short, the rule we adopted in Doe 1 is that a forum selection clause that specifies "courts of" a state limits jurisdiction to state courts, but specification of "courts in" a state includes both state and federal courts.”

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Simonoff v Expedia, Inc, 643 F.3d 1202 (9th. Cir.2011)

¬ Whether a receipt that is e-mailed (and which contains more than last 5 digits of a credit or debit card or an expiration date) is “electronically printed” contrary to Fair and Accurate Credit Transactions Act ("FACTA").

¬ “The question we consider under FACTA is the meaning of the words "print" and ”electronically printed" in connection with an emailed receipt. "Print" refers to many different technologies—from Mesopotamian cuneiform writing on clay cylinders to the Gutenberg press in the fifteenth century, Xerography in the early twentieth century, and modern digital printing—but all of those technologies involve the making of a tangible impression on paper or other tangible medium...Although computer technology has significantly advanced in recent years, we commonly still speak of printing to paper and not to, say, iPad screens. Nobody says, "Turn on your Droid (or iPhone or iPad or Blackberry) and print a map of downtown San Francisco on your screen." We conclude that under FACTA, a receipt that is transmitted to the consumer via email and then digitally displayed on the consumer's screen is not an "electronically printed" receipt.”

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Druet v. Girouard, 2012 NBCA 40

¬ “As a matter of general principle, we accept that an exchange of emails can satisfy the writing requirement under the Electronic Transactions Act and, correlatively, the Statute of Frauds. Of course, to reach this conclusion, one must apply the principle of “joinder”.”

¬ “This is a consumer transaction involving the sale of residential property and negotiations conducted in cyberspace without the intervention or assistance of professionals. In these circumstances, we believe the law is better served by a rebuttable presumption against the intention to establish legal relations. That presumption accords with what we perceive to be the populist view that generally an exchange of emails is to be regarded as a preliminary negotiation that may lead to the signing of a formal contract. The notion that a person can sift through a series of emails, identify the 3 P’s, find a signature which satisfies the Electronic Transactions Act and, correlatively, the Statute of Frauds, and then have the court fill in any necessary contractual terms is simply out of step with the reasonable expectations of today’s typical consumer. There are still instances where formalities count. The purchase of a home is one of them. However, we wish to reinforce the obvious. Rarely are cases decided on the basis of presumptions alone.”

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Other Contract Issues

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R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42

¬ “At the first stage of this test, the question is whether the facts disclose a relationship of proximity in which failure to take reasonable care might foreseeably cause loss or harm to the plaintiff.”

¬ “Proximity and foreseeability are two aspects of one inquiry — the inquiry into whether the facts disclose a relationship that gives rise to a prima facie duty of care at common law... Foreseeability must be grounded in a relationship of sufficient closeness, or proximity, to make it just and reasonable to impose an obligation on one party to take reasonable care not to injure the other.”

¬ “In a claim of negligent misrepresentation, both these requirements for a prima facie duty of care are established if there was a “special relationship” between the parties...a special relationship will be established where: (1) the defendant ought reasonably to foresee that the plaintiff will rely on his or her representation; and (2) reliance by the plaintiff would be reasonable in the circumstances of the case.  Where such a relationship is established, the defendant may be liable for losses suffered by the plaintiff as a result of a negligent misstatement.”

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Oz Optics Limited v. Timbercon, Inc., 2011 ONCA 71430

¬ Court finding Timbercon liable for negligent misrepresentation by telling a key strategic technology partner Oz that is was the sole supplier of attenuators for supplier to Lockheed Martin.

¬ “In my view, the trial judge...correctly concluded that there was a “special relationship” between Timbercon and Oz”.

¬ Per trial Judge:

¬ “Although the relationship was not one of joint venturers given the absence of any contract between the parties, it was certainly more than a customer/supplier relationship. The parties’ relationship did share some of the characteristics of a joint venture – both parties contributed knowledge and effort in the pursuit of a common venture, and it was a single undertaking in which both parties had a mutual expectation of profit.”

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PCM Technologies Inc. v. O’Toole, 2012 ONSC 2534

¬ Reseller Phoenix Systems found liable for negligent misrepresentation and breach of  Sale of Goods Act  for supplying software (SYSPRO) that didn’t integrate CRM and ERP functionality.

¬ “Phoenix concedes that there was a special relationship but denies that the remaining four elements have been met by PCM.

¬ In my view, Phoenix made untrue, inaccurate and misleading statements and these statements were made negligently. PCM reasonably relied upon the negligent misrepresentations and as a result, suffered damages.”

¬ “As the Court stated in Queen v. Cognos Inc., “[t]here are many reported cases in which a failure to divulge highly relevant information is a pertinent consideration in determining whether a misrepresentation was negligently made.” I find that O’Toole failed to divulge the fact that SYSPRO had limitations that could prevent it from meeting PCM’s stated needs. Thus, O’Toole breached the standard of care in making these untrue, inaccurate and misleading statements to PCM.”   

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Donohue v Apple, Inc, 2012 WL 1657119 (N.D.Cal. May 10, 2012)

¬ Class action related to a defect in the Apple iPhone that caused its "signal meter" to inaccurately reflect the strength of the device's cellular network connection. Plaintiff alleges that the contract for the purchase of the iPhone included a promise to provide a working signal meter and that such a promise is contained in the User Guide.

¬ “Apple argues that the User Guide is merely an instruction manual, and therefore does not give rise contractual obligations. The court agrees. A review of the User Guide shows that it provides directions for using an iPhone and descriptions of the device's functions, but includes no "promises" which plaintiff could have "accepted.“...Plaintiff does not even allege that he saw the User Guide before purchasing his iPhone, further undermining his claim that he accepted its terms as part of a contract of sale... On these facts, adopting the position that an instructional manual is a contract would vastly expand the scope of a manufacturer's express and implied warranties, creating a perverse incentive for manufacturers to avoid including comprehensive manuals with their products.”

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Loychuk v. Cougar Mountain Adventures Ltd., 2012 BCCA 122 

¬ “As Binnie J. stated in Tercon, “The residual power of a court to decline enforcement exists but, in the interest of certainty and stability of contractual relations, it will rarely be exercised”:  para. 117”

¬ “What those examples have in common is that the party seeking to rely on an exclusion clause either knew it was putting the public in danger by providing a substandard product or service, or was reckless as to whether it was doing so.  In other words, that party engaged in conduct that is so reprehensible that it would be contrary to the public interest to allow it to avoid liability.  I am not convinced that where a participant is injured through the negligence of an operator, there is such a difference between situations where participants have some measure of control and those where they do not, that the latter rises to this high level of public policy.  In both cases the injury was caused by negligence which cannot itself be controlled by the participant.”

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Rainy Sky SA & Orsd v Kookmin Bank [2011] UKSC 50 (2 November 2011) 

¬ “The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.”

¬ “where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense.”

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OSFI Feb 29, 2012: New technology-based outsourcing arrangements¬ “Information technology plays a very important role in the financial services

business and OSFI recognizes the opportunities and benefits that new technology-based services such as Cloud Computing can bring; however, FRFIs should also recognize the unique features of such services and duly consider the associated risks.

¬ As such, and in light of the proliferation of new technology-based outsourcing services, OSFI is reminding all FRFIs that the expectations contained in Guideline B-10 remain current and continue to apply in respect of such services. In particular, FRFIs should consider their ability to meet the expectations contained in Guideline B-10 in respect of a material arrangement, with an emphasis on i) confidentiality, security and separation of property, ii) contingency planning, iii) location of records, iv) access and audit rights, v) subcontracting, and vi) monitoring the material outsourcing arrangements.

¬ OSFI considers the management of outsourcing risks important to ensuring that FRFIs continue to be managed prudently and OSFI will be monitoring this issue as part of its ongoing supervisory work.”

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Jurisdiction and e-commerce

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Club Resorts Ltd. v. Van Breda, 2012 SCC 17¬ Court elaborates on the “real and substantial connection” test conflicts rule for

the assumption of jurisdiction (adjudicative jurisdiction). 

¬  ”Comity cannot subsist in private international law without order, which requires a degree of stability and predictability in the development and application of the rules governing international or interprovincial relationships. Fairness and justice are necessary characteristics of a legal system, but they cannot be divorced from the requirements of predictability and stability which assure order in the conflicts system.”

¬ “Jurisdiction must — irrespective of the question of forum of necessity, which I will not discuss here — be established primarily on the basis of objective factors that connect the legal situation or the subject matter of the litigation with the forum.... This means that the courts must rely on a basic list of factors that is drawn at first from past experience in the conflict of laws system and is then updated as the needs of the system evolve.  Abstract concerns for order, efficiency or fairness in the system are no substitute for connecting factors that give rise to a “real and substantial” connection for the purposes of the law of conflicts.”  

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Club Resorts Ltd. v. Van Breda, 2012 SCC 17

¬  To recap, in a case concerning a tort, the following factors are presumptive connecting factors that, prima facie, entitle a court to assume jurisdiction over a dispute:

¬ (a)      the defendant is domiciled or resident in the province;

¬  (b)      the defendant carries on business in the province;

¬  (c)      the tort was committed in the province; and

¬  (d)      a contract connected with the dispute was made in the province.

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Club Resorts Ltd. v. Van Breda, 2012 SCC 17

“Carrying on business in the jurisdiction may also be considered an appropriate connecting factor. But considering it to be one may raise more difficult issues. Resolving those issues may require some caution in order to avoid creating what would amount to forms of universal jurisdiction in respect of tort claims arising out of certain categories of business or commercial activity. Active advertising in the jurisdiction or, for example, the fact that a Web site can be accessed from the jurisdiction would not suffice to establish that the defendant is carrying on business there. The notion of carrying on business requires some form of actual, not only virtual, presence in the jurisdiction, such as maintaining an office there or regularly visiting the territory of the particular jurisdiction. But the Court has not been asked in this appeal to decide whether and, if so, when e-trade in the jurisdiction would amount to a presence in the jurisdiction. With these reservations, “carrying on business” within the meaning of rule 17.02(p) may be an appropriate connecting factor.”

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J. McIntyre Machinery, Ltd v Nicastro 131 S.Ct. 2780 (2011)

¬ “Due process protects the defendant's right not to be coerced except by lawful judicial power. As a general rule, the exercise of judicial power is not lawful unless the defendant "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.“...There may be exceptions, say, for instance, in cases involving an intentional tort. But the general rule is applicable in this products-liability case, and the so-called "stream-of-commerce" doctrine cannot displace it.”

¬ “The defendant's transmission of goods permits the exercise of jurisdiction only where the defendant can be said to have targeted the forum; as a general rule, it is not enough that the defendant might have predicted that its goods will reach the forum State.”

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J. McIntyre Machinery, Ltd v Nicastro 131 S.Ct. 2780 (2011)

¬ Per Breyer concurring in judgment but not in reasons.

¬ “The plurality seems to state strict rules that limit jurisdiction where a defendant does not “inten[d] to submit to the power of a sovereign” and cannot “be said to have targeted the forum.” But what do those standards mean when a company targets the world by selling products from its Web site? And does it matter if, instead of shipping the products directly, a company consigns the products through an intermediary (say, Amazon.com) who then receives and fulfills the orders? And what if the company markets its products through popup advertisements that it knows will be viewed in a forum? Those issues have serious commercial consequences but are totally absent in this case.”

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Breeden v. Black, 2012 SCC 19¬ “The issue of the assumption of jurisdiction is easily resolved in this case

based on a presumptive connecting factor — the alleged commission of the tort of defamation in Ontario. It is well established in Canadian law that the tort of defamation occurs upon publication of a defamatory statement to a third party. In this case, publication occurred when the impugned statements were read, downloaded and republished in Ontario by three newspapers.  It is also well established that every repetition or republication of a defamatory statement constitutes a new publication. The original author of the statement may be held liable for the republication where it was authorized by the author or where the republication is the natural and probable result of the original publication...In my view, the republication in the three newspapers of statements contained in press releases issued by the appellants clearly falls within the scope of this rule.  In the circumstances, the appellants have not displaced the presumption of jurisdiction that results from this connecting factor.”

¬ See also, Éditions Écosociété Inc. v. Banro Corp., 2012 SCC

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Lucasfilm Ltd & Ors v Ainsworth & Anor [2011] UKSC 39 (27 July 2011)¬ Is a claim to US copyright justiciable in the UK?

¬ ‘There is no doubt that the modern trend is in favour of the enforcement of foreign intellectual property rights...

¬ There are no issues of policy which militate against the enforcement of foreign copyright. States have an interest in the international recognition and enforcement of their copyrights, as the Berne Convention on the International Union for the Protection of Literary and Artistic Works shows. Many of the points relied on by the Court of Appeal to justify the application of the Moçambique rule in this case as a matter of policy would apply to many international cases over which the English court would have jurisdiction and would in principle exercise it, especially the suggestion that questions of foreign law would have to be decided. It was also said...that a defendant may be restrained by injunction from doing acts in this country which are lawful in this country. But such an injunction will be granted only if the acts are anticipated to achieve fruition in another country, and there is no objection in principle to such an injunction. Nor is there any objection in principle, as the Court of Appeal thought, to a restraint on acts in another country. Extra-territorial injunctions are commonly granted here against defendants subject to the in personam jurisdiction.”

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Shropshire v Canning Case 10-CV-01941-LHK (N.D.Cal. Aug. 22, 2011)

¬ Canning, Ontario resident, creates x-mas video synced with Irish Rovers singing “Grandma Got Run Over by a Reindeer” and posts it on YouTube. Canning is sued for copyright infringement in California.

¬ The Court finds that in this case, the alleged act of direct copyright infringement — uploading a video from Canada to YouTube's servers in California for display within the United States — constitutes an act of infringement that is not "wholly extraterritorial" to the United States… The allegedly infringing act in this case began in Canada, where Defendant created his Grandma song video. Had Defendant stopped there, there is no doubt that the strict presumption against extraterritoriality would apply and Plaintiff would not have a claim.

¬ The problem is that Defendant did not stop at the mere creation of the Grandma song video in Canada, but instead allegedly uploaded it to YouTube's California servers for display in the United States after agreeing to YouTube's Terms of Service agreement.

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Privacy

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Jones v Tsige 2012 ONCA 32

¬ “One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.”

¬ According to the Court, the key features of the cause of action of intrusion upon seclusion:

¬ first, that the defendant’s conduct must be intentional, which would include reckless;

¬ second that the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and

¬ third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish.

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Jones v Tsige 2012 ONCA 32 ¬ “These elements make it clear that recognizing this cause of action will not open

the floodgates. A claim for intrusion upon seclusion will arise only for deliberate and significant invasions of personal privacy. Claims from individuals who are sensitive or unusually concerned about their privacy are excluded: it is only intrusions into matters such as one’s financial or health records, sexual practices and orientation, employment, diary or private correspondence that, viewed objectively on the reasonable person standard, can be described as highly offensive.

¬ Finally, claims for the protection of privacy may give rise to competing claims. Foremost are claims for the protection of freedom of expression and freedom of the press. As we are not confronted with such a competing claim here, I need not consider the issue in detail. Suffice it to say, no right to privacy can be absolute and many claims for the protection of privacy will have to be reconciled with, and even yield to, such competing claims. A useful analogy may be found in the Supreme Court of Canada’s elaboration of the common law of defamation in Grant v. Torstar where the court held, at para. 65, that “[w]hen proper weight is given to the constitutional value of free expression on matters of public interest, the balance tips in favour of broadening the defences available to those who communicate facts it is in the public’s interest to know.” 

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United Food and Commercial Workers, Local 401 v Alberta (Attorney General), 2012 ABCA 130

¬ Does PIPA violate the Charter right to free expression by preventing videotaping of people crossing picket lines and posting same on Internet?

¬ “It is also not apparent that the salutary effects of the Act outweigh its deleterious effects. While the protection of personal information is important, it is no more important than collective bargaining and the rights of workers to organize. It is also no more important than the right of the union to communicate its message to the public. On the other hand, the privacy interest being protected here is minimal. The persons who were videotaped were in a public place, crossing an obvious picket line, in the face of warning signs that images were being collected. The privacy expectations were very low. Protecting that  low expectation of privacy does not warrant the significant stifling of expression that resulted from the Adjudicator’s order.”

¬ “Individuals undoubtedly do have an interest in how their images are used. Members of the public cannot, however, have a reasonable expectation that they can live their lives in total anonymity. People do not have a right to keep secret everything they do in public, such as crossing picket lines. There is no recognized right to withhold consent to the dissemination of information about unpleasant conduct. Holding people accountable for what they do or do not do in public is a component of the right to free expression.”

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Girao v. Zarek Taylor Grossman Hanrahan LLP, 2011 FC 1070

¬ “Mrs. Yolanda Girao, seeks remedies for a breach of privacy arising from the disclosure of her personal information contained in a letter and Report of Findings issued by the Privacy Commissioner of Canada which the respondent law firm posted on the firm’s website. Among other things, Mrs.Girao seeks compensation in the amount of $5,000,000.00 for public humiliation and emotional damage.”

¬  ”The respondent was careless in posting but did not act in bad faith.  ZTGH deleted from its website all references to the applicant as soon as it became aware that there was a concern. The law firm was negligent in not taking steps to ensure that any personal information about an identifiable complainant was removed before it posted the report. In the result I consider it appropriate to make an award of $1500.00.”

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Hoang v Amazon.com, Inc. Case No. C11-1709 MJP. (W.D.Wash. Mar. 30, 2012)

¬  Plaintiff entered into a contract through IMDbPro's Subscriber Agreement and incorporated Privacy Policy which  said IMDb will "carefully and sensibly" manage how information about customers is "used and shared," and will use the information provided “for such purposes as responding to your requests, customizing future browsing for you, improving our site, and communicating with you”.

¬ “As a matter of law, it is not clear that the parties intended the phrase "improving our site" to include taking information given for processing payment and using it to search for information to add to individual actor profile pages. The lack of any express limitation in the agreement does not constitute a subscriber's acknowledgement that no limitations apply. Instead, Defendants are required to abide by the general assurances they give to customers to "carefully and sensibly" manage information provided by subscribers.”

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Canada’s Anti-Spam Law (CASL)

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Canada’s Anti-Spam Law (CASL)

¬ Received royal assent on December 15, 2010.

¬ Original draft regulations were published in the summer of 2011 by the CRTC and Industry Canada. The Canadian business community raised serious objections to their strict requirements.

¬ The CRTC enacted revised regulations, which were finalized on March 28, 2012. The new regulations eased up on some of the more onerous requirements.

¬ Revised draft regulations from Industry Canada are required. They are expected to ease up on certain requirements and may contain new exceptions.

¬ Expected to be in force in 2013.

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Canada’s Anti-Spam Law (CASL)

¬ Anti-SPAM

¬ Anti-spyware/malware

¬ Amendments to PIPEDA prohibiting address harvesting and personal information harvesting

¬ Amendments to the Competition Act prohibiting false or misleading representations in electronic messages, sender information in electronic messages, subject matter information in electronic messages, locaters

¬ Very problematic. See, Will it be illegal to recommend a dentist under Canada’s new anti-spam law (CASL)? http://www.barrysookman.com/2012/01/03/will-it-be-illegal-to-recommend-a-dentist-under-canada%E2%80%99s-new-anti-spam-law-casl/

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Richard v. Time Inc., 2012 SCC 8¬ CASL amends Competition Act new (s. 74.011 and s. 52.01)

¬ prohibits representation that is false or misleading in a material respect in electronic message

¬ prohibits false or misleading representation in (i) sender information in electronic message; (ii) subject matter information in electronic message; and (iii) locater

¬ “it is our opinion that the test under s. 218 C.P.A. is that of the first impression. In the case of false or misleading advertising, the general impression is the one a person has after an initial contact with the entire advertisement, and it relates to both the layout of the advertisement and the meaning of the words used. This test is similar to the one that must be applied under the Trade‑marks Act.”

¬ “A court asked to assess the veracity of a commercial representation must therefore engage...in a two‑step analysis that involves — having regard...to the literal meaning of the words used by the merchant — (1) describing the general impression that the representation is likely to convey to a credulous and inexperienced consumer; and (2) determining whether that general impression is true to reality.  If the answer at the second step is no, the merchant has engaged in a prohibited practice.”

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Liability for Automated Processes

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Australian Competition and Consumer Commission v Google Inc [2012] FCAFC 49

¬ Whether Google has engaged in misleading and deceptive conduct as a result of its AdWord program displaying an advertiser’s web address, or Uniform Resource Locator (URL), in the sponsored link in response to a Google search using search terms which consist of or include the name of a competitor of the advertiser.

¬ “Google’s conduct cannot fairly be described as merely passing on the statements of the advertiser for what they are worth. In those circumstances, it is an error to conclude that Google has not engaged in the conduct of publishing the sponsored links because it has not adopted or endorsed the message conveyed by its response to the user’s query.”

¬ “Critical to this conclusion is the fact that the sponsored link is displayed on the screen in response to the user’s query which is made by the entry of selected key words. Thus, the user asks a question of Google and obtains Google’s response. Several features of the overall process indicate that Google engages in misleading conduct.”

¬ “The conduct is Google’s because Google is responding to the query and providing the URL. It is not merely passing on the URL as a statement made by the advertiser for what the statement is worth. Rather, Google informs the user, by its response to the query, that the content of the sponsored link is responsive to the user’s query about the subject matter of the keyword.”

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Australian Competition and Consumer Commission v Google Inc [2012] FCAFC 49“This conclusion is reinforced by a consideration of the nature of

Google’s search engine, and the AdWords program. Google’s search engine is the information retrieval system which the user employs to navigate his or her way through the web using keywords that deliver links to other locations on the web. Google supplies its advertising customers with the ability to select keywords which are expected to be used by persons making enquiries through Google’s search engine. The ability of advertisers to select “broad match” keywords enables them to trigger sponsored links through Google’s search engine based on known associations which are determined by Google’s proprietary algorithms. Although the keywords are selected by the advertiser, perhaps with input from Google, what is critical to the process is the triggering of the link by Google using its algorithms. That is a further reason to conclude that it is Google’s conduct as a principal, not merely as a conduit, which is involved in each of the four instances that form the subject matter of this appeal.”

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 Crookes v Newton 2011 SCC 47 

¬ “A hyperlink, by itself, should never be seen as “publication” of the content to which it refers.”  

¬ “it is the actual creator or poster of the defamatory words in the secondary material who is publishing the libel when a person follows a hyperlink to that content“.

¬ “Recently, jurisprudence has emerged suggesting that some acts are so passive that they should not be held to be publication.  In Bunt v. Tilley, [2006] EWHC 407, [2006] 3 All E.R. 336 (Q.B.), considering the potential liability of an Internet service provider, the court held that in order to hold someone liable as a publisher, “[i]t is not enough that a person merely plays a passive instrumental role in the process”; there must be “knowing involvement in the process of publication of the relevant words”... see also Metropolitan International Schools Ltd. v. Designtechnica Corp., [2009] EWHC 1765 (Q.B.)).”

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Reference re Broadcasting Act, 2012 SCC 4¬ “We therefore agree with Noël J.A.’s answer to the reference question, namely,

that ISPs do not carry on “broadcasting undertakings” under the Broadcasting Act when, in their role as ISPs, they provide access through the Internet to “broadcasting” requested by end-users.”

¬ This interpretation of “broadcasting undertaking” is consistent with Electric Despatch Co. of Toronto v. Bell Telephone Co. of Canada (1891), 20 S.C.R. 83.  In Electric Despatch, the Court had to interpret the term “transmit” in an exclusivity contract relating to messenger orders.  Like the ISPs in this case, Bell Telephone had no knowledge or control over the nature of the communication being passed over its wires.  This Court had to determine whether the term “transmit” implicated an entity who merely provided the mode of transmission.  The Court concluded that only the actual sender of the message could be said to “transmit” it...

¬ This Court relied on Electric Despatch in Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427, a proceeding under the Copyright Act, R.S.C. 1985, c. C-42, to conclude that since ISPs merely act as a conduit for information provided by others, they could not themselves be held to communicate the information…”

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Tamiz v Google Inc Google UK Ltd [2012] EWHC 449 (QB) (02 March 2012) 

¬ Google liability for not taking down or removing access to allegedly defamatory statements posted on Blogger.com.

¬ “Ms Evans next raised the argument that Google Inc should not be regarded, as a matter of English law, as a publisher of the words complained of…

¬ The position may well be fact-sensitive. Liability may turn upon the extent to which the relevant ISP entity has knowledge of the words complained of, and of their illegality or potential illegality, and/or on the extent to which it has control over publication…”

¬ “It seems to me to be a significant factor in the evidence before me that Google Inc is not required to take any positive step, technically, in the process of continuing the accessibility of the offending material, whether it has been notified of a complainant’s objection or not. In those circumstances, I would be prepared to hold that it should not be regarded as a publisher, or even as one who authorises publication, under the established principles of the common law. As I understand the evidence its role, as a platform provider, is a purely passive one… I would rule that Google Inc is not liable at common law as a publisher…”

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Social Media Issues

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Tucows.Com Co v Lojas Renner 2011 ONCA 548¬ Issue: is a domain name (renner.com) personal property located in Ontario within the

meaning of Rule 17.02(a)

¬ The bundle of rights associated with the domain name <renner.com> that Tucows has (as purchaser and registrant) satisfies the attributes of property...in that at present Tucows can enforce those rights against all others...

¬ Tucows derives income from being the holder of the rights in the domain name <renner.com>… The registered owner of the domain name has the right to exclusively direct traffic to the domain name’s corresponding website and to exclude anyone else from using the same name...

¬ While the decisions in Kremner, Saulnier, and Bouckhuyt and the academic commentators all emphasize exclusivity of a right as an essential aspect of property, other judicial decisions...hold that other requirements must also be met...“[b]efore a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.”  A domain name also satisfies this definition of property.

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Eagle v Edcomm, Inc et al 2011 WL 6739448 (E.D.Pa. Dec 22, 2011)

¬ Is a LinkedIn account a property right?

¬ `Pennsylvania courts continue to hold that only tangible property, or intangible property rights which have merged with, or are otherwise connected to, a document, are subject to conversion.”… Apparel Bus. Sys., LLC v. Tom James Co., No. Civ.A.06–1092, 2008 WL 858754, at *18 (E.D.Pa. Mar.28, 2008) (“Courts in the Eastern District of Pennsylvania have found that domain names and satellite signals are not subject to conversion because they are not types of intangible property that merge with particular documents.”). Defendant concedes these principles and states that, as a result, it “will not pursue conversion claims” with respect to the cell phone number and LinkedIn account.

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Baglow v. Smith, 2012 ONCA 407¬ Is statement “This coming from one of the Taliban’s more vocal supporters” defamatory

“in the cut and thrust of political discourse in the internet blogosphere”.

¬ “although the respondents come close to asserting – but do not quite assert – that “anything goes” in these types of exchanges, is that the case in law?  Do different legal considerations apply in determining whether a statement is or is not defamatory in these kinds of situations than apply to the publication of an article in a traditional media outlet?  For that matter, do different considerations apply even within publications on the internet – to a publication on Facebook or in the “Twitterverse”, say, compared to a publication on a blog? 

¬ These issues have not been addressed in the jurisprudence in any significant way. The responses may have far-reaching implications. They are best crafted on the basis of a full record after a trial – at least until the law evolves and crystallizes to a certain point – in my view.  A trial will permit these important conclusions to be formulated on the basis of a record informed by the examination and cross-examination of witnesses and quite possibly with the assistance of expert evidence to provide the court – whose members are perhaps not always the most up-to-date in matters involving the blogosphere – with insight into how the internet blogging world functions and what may or may not be the expectations and sensibilities of those who engage in such discourse in the particular context in which that discourse occurs.”

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Eagle v Edcomm, Inc et al 2011 WL 6739448 (E.D.Pa. Dec 22, 2011)

¬ Claim for misappropriation of trade secret in LinkedIn connections failed as they were public:

¬ In the present case, to the extent Defendant alleges misappropriation of a trade secret, its claim must necessarily fail. As set forth above, neither the telephone number nor the LinkedIn account connections qualify as trade secrets, as both are either generally known in the wider business community or capable of being easily derived from public information.

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Sasqua Group, Inc. v Courtney 2010 WL 3613855 (E.D.N.Y. Aug. 2, 2010), adopted 2010 WL 370468 (S.D.N.Y. Sep. 7, 2010)

¬ Sasqua brought trade secret misappropriation claim against former consultant in executive search business. Claim was that defendant used database that contained needs of clients, preferences, hiring practices and business strategies.

¬ Claim dismissed as database was not a trade secret given easy public availability on internet and social networks like Facebook and LinkedIn.

¬ In sum, Plaintiffs have failed to prove a physical appropriation or copying of confidential information or wrongful disclosure or use of a trade secret... The information in Sasqua's database concerning the needs of its clients, their preferences, hiring practices, and business strategies, as well as Sasqua's acquaintance with key decision-makers at those firms may well have been a protectable trade secret in the early years of Sasqua's existence when greater time, energy and resources may have been necessary to acquire the level of detailed information to build and retain the business relationships at issue here. However, for good or bad, the exponential proliferation of information made available through full-blown use of the Internet and the powerful tools it provides to access such information in 2010 is a very different story.

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Patents, Trade-Secrets and Trade-marks

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Canada (Attorney General) v. Amazon.com, Inc., 2011 FCA 328 

¬ “I would allow the appeal. I would award no costs as none have been sought. I would set aside the judgment of the Federal Court and replace it with a judgment that allows Amazon’s appeal of the Commissioner’s decision and requires the Commissioner to re-examine the patent application on an expedited basis in accordance with these reasons.”

¬ Patent Office issued “one-click” patent to Amazon.com “Method and System For Placing A Purchase Order Via A Communication Network” (Canadian Patent Application No. 2,246,933).

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Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3

¬ A “trade secret”...should be understood as being a plan or process, tool, mechanism or compound which possesses the following characteristics:

¬ (1) the information must be secret in an absolute or relative sense (is known only by one or a relatively small number of persons);

¬ (2) the possessor of the information must demonstrate that he has acted with the intention to treat the information as secret;

¬ (3) the information must be capable of industrial or commercial application;

¬ (4) the possessor must have an interest (e.g. an economic interest) worthy of legal protection.

¬ A trade secret is a subset of confidential commercial information.

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Interflora Inc. v Marks & Spencer plc, ECJ Case C-323/09 22 Sept. 2011

¬ Does the use of a trade-mark as a keyword infringe a trade-mark in the EU?

¬ “the proprietor of a trade mark is entitled to prevent a competitor from advertising – on the basis of a keyword which is identical with the trade mark and which has been selected in an internet referencing service by the competitor without the proprietor’s consent – goods or services identical with those for which that mark is registered, where that use is liable to have an adverse effect on one of the functions of the trade mark. Such use:

¬ adversely affects the trade mark’s function of indicating origin where the advertising displayed on the basis of that keyword does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services concerned by the advertisement originate from the proprietor of the trade mark or an undertaking economically linked to that proprietor or, on the contrary, originate from a third party;...

¬ adversely affects the trade mark’s investment function if it substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.

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Interflora Inc. v Marks & Spencer plc, ECJ Case C-323/09 22 Sept. 2011

 ”the proprietor of a trade mark with a reputation is entitled to prevent a competitor from advertising on the basis of a keyword corresponding to that trade mark, which the competitor has, without the proprietor’s consent, selected in an internet referencing service, where the competitor thereby takes unfair advantage of the distinctive character or repute of the trade mark (free-riding) or where the advertising is detrimental to that distinctive character (dilution) or to that repute (tarnishment).”

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*See, Copyright law 2011 – the year in review in Canada and around the world

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In Supreme Court – what’s at stake

¬ Tariff 22 –SOCAN appeal - is an internet preview a fair dealing for research purposes?

¬ K-12 –fair dealing in the K-12 educational sector.

¬ what is research

¬ whose purposes should the court consider in determining the allowable purpose and fairness

¬ is the effect on the market the most important fairness factor

¬ is fair dealing to be construed to be consistent with the three step test

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In Supreme Court – what’s at stake

¬ Tariff 22 – Telco and ESA/ESAC appeals

¬ is a download a “communication”

¬ are demand services “to the public”

¬ are rights separate and distinct

¬ will the Court harmonize Canadian and US law – ASCAP v RealNetworks and Cablevision

¬ Re: Sound v Motion Picture Theatre Association of Canada 2011 FCA 70 – Are recording artists and record companies entitled to collect equitable remuneration under s. 19 of Copyright Act when their music is played in movies and on TV? How to construe the exclusion for soundtracks in the definition of sound recording?

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France Animation v Robinson, 2011 QCCA 1361, leave granted May 2012

Court had to determine whether sketches and characters for the proposed TV series Robinson Curiosity were infringed by the later series Robinson Sucro.

Issues in appeal:

¬ Scope of copyright protection for sketches and characters for TV series

¬ Test for copyright infringement by reproduction

¬ Can other liability claims be brought together with copyright claims

¬ Can the Quebec Charter of Rights be a basis for granting remedies for infringement

¬ Calculation damages and statutory damages

¬ Use of experts in copyright cases

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CA, Inc. v ISI Pty Limited [2012] FCA 35¬ ISI developed a conversion program to enable users of CA’s Datacom DBMS to

convert to IBM’s DB2. ISI developed macros to replicate the functionality of CA’s macros to enable user applications written for Datacom to function with DB2. Key issue: did the macros infringe copyright.

¬ “As a general observation, there are similarities and differences between the R9 CA URT Macros and the ISI Replacement Macros. Each set of macros reflects partial differences in function. However, there are similarities, necessitated by the purpose and function they have in common. The common functions are in common language and names. That is, the ISI Replacement Macros contain so much of the R9 CA URT Macros as is necessary to fulfil those functions. The functions concern the access to and entry into Datacom. This part mirrors that part of the R9 CA URT Macros with minor and inconsequential differences.”

¬ “The ISI Replacement Macros must correspond sufficiently with the CA URT Macros in order to interact with them and the URTs generated by them. This correspondence is necessary first to enable diversion to DB2 or a passing to Datacom and then, ultimately, to replace the CA URT Macros while still enabling use with the client’s existing URTs. In order to fulfil these objectives, certain parameters must be included in the ISI Replacement Macros. “

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CA, Inc. v ISI Pty Limited [2012] FCA 35

¬ “The 1999 Macros are, it is accepted by the experts, virtually identical to the R9 CA URT Macros. Bearing in mind the way in which the CA URT Macros were created and the arbitrary decisions of Mr Lynn as part of that process, the facts that the 1999 Macros when compared with the R9 CA URT Macros:

¬ are so textually similar;

¬ have identical names;

¬ act to create URTs;

¬ utilise the four External Macros and the DBURGEN Macro; and

¬ contain parameters that are the same, including those not utilised by 2BDB2 or for the purposes of DB2,

¬ means that the clear conclusion is that the 1999 Macros are a reproduction of a substantial part of the CA URT Macros, notwithstanding any minor differences.”

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UMG Recordings v Shelter Capital Partners LLC (Veoh Networks) 101 U.S.P.Q.2d 1001 (9th. Cir. 2011)¬ Veoh satisfied the threshold requirement to fall within the hosting exception that

the infringement be “by reason of the storage at the direction of a user of material” residing on Veoh’s system even though Veoh had transcoded the files.

¬ Hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the DMCA knowledge requirement.

¬ Veoh’s general knowledge that it hosted copyrightable material and that its services could be used for infringement was also insufficient to constitute a red flag.

¬ The Court held that the “right and ability to control” under § 512(c) (the vicarious liability condition) “requires control over specific infringing activity the provider knows about”.

¬ June 7, 2012, the Ninth Circuit ordered written submissions in light of the Second Circuit’s decision in the Viacom/YouTube case.

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Viacom International, Inc v YouTube, Inc. 676 F.3d 19 (2nd.Cir. 2012)

¬ Actual knowledge or awareness of specific and identifiable instances of infringement are required before online service provider can lose the DMCA hosting safe harbor.

¬ Willful blindness doctrine can apply to meet the DMCA knowledge threshold.

¬ Vicarious liability condition in DMCA safe harbor does not contain specific knowledge requirement.

¬ Automated functions of conversion, transcoding, playback and related video function are protected under the hosting safe harbor.

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The Authors Guild v Google, Inc 2012 WL 1951790 (S.D.N.Y. May 31, 2012)

“Furthermore, given the sweeping and undiscriminating nature of Google's unauthorized copying, it would be unjust to require that each affected association member litigate his claim individually. When Google copied works, it did not conduct an inquiry into the copyright ownership of each work; nor did it conduct an individualized evaluation as to whether posting "snippets" of a particular work would constitute "fair use." It copied and made search results available en masse. Google cannot now turn the tables and ask the Court to require each copyright holder to come forward individually and assert rights in a separate action. Because Google treated the copyright holders as a group, the copyright holders should be able to litigate on a group basis.”

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Waldman v. Thomson Reuters Corporation, 2012 ONSC 1138

¬ “I would have thought that the overwhelming majority of documents on Litigator are the product of judgment and skill, especially since Thomson advertised this feature in promoting litigator, but, nevertheless, Thomson is entitled to assert that a particular document is not subject to copyright protection, and it cannot be simply assumed that originality exists in all of the court documents available on Litigator. Thomson’s position means that question 1 is not a certifiable question because it lacks commonality.”

¬ “I agree with Thomson that ultimately authorship and ownership is an individual issue about what class member has the copyright in a particular court document. If one borrows from the set theory of mathematics, there will be a correspondence between individual members of the set of authors and copyright owners and the set of documents in Litigator, but this correspondence will be an individual correspondence and not a class-wide correspondence. Accordingly, question 2 is not certifiable because again it is not a common issue and its answer requires individual assessments.”

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Waldman v. Thomson Reuters Corporation, 2012 ONSC 1138

¬ “I conclude that within proposed question 3, there are certifiable common issues as follows...

¬ Did Thomson through its Litigator service reproduce, publish, telecommunicate to the public, sell, rent, translate, or hold itself out as the author or owner of court documents?

¬ Did Thomson through its Litigator service authorize subscribers to reproduce, publish, telecommunicate to the public, sell, rent, translate, or hold themselves out as the author or owner of court documents?”

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Waldman v. Thomson Reuters Corporation, 2012 ONSC 1138

¬ “I conclude that within question 4, there are certifiable common issues as follows:

¬ Did Thomson have the copyright owner’s implicit consent to reproduce, publish, telecommunicate to the public, sell, rent, translate, or hold itself out as the author or owner of court documents?

¬ Does Thomson have a public policy defence to copyright infringement or to the violation of moral rights based on (a) fair dealing, (b) the open court principle, (c) freedom of expression, (d) the necessity of using the idea of the court document as it is expressed, or (e) a business or professional custom or public policy reason that would justify reproducing, publishing, telecommunicating to the public, selling, renting, translating, or holding itself out as the author or owner of court documents? “ 

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Slides available @ barrysookman.com and mccarthy.ca

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* Underlines in quotes may reflect emphasis added.

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