Developments in Computer, Internet and E-Commerce Law (2011-2012)

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

Barry B. Sookman
bsookman@mccarthy.ca / 416-601-7949 June 21, 2012

McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 11536863

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

McCarthy Tétrault S.E.N.C.R.L., s.r.l. / mccarthy.ca 11536863 2

Electronic Contracting


Kraft Real Estate Investments, LLC v Homeway.com, In
. 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.”


Kraft Real Estate Investments, LLC v Homeway.com, In
. 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.”


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.”


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,”


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.”


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.


One beacon Insurance Company v Crowley Marine Se
. 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.”


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.”

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.”


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.”

Liberty’s Syndicates at Lloyd’s v Walnut Advisory Co
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.”

Liberty’s Syndicates at Lloyd’s v Walnut Advisory Co
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.”


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.”

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.”

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.”

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.”


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.”

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.”


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.”


Other Contract Issues


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.”


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.”


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.”


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.”


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.”


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.”


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.”


Jurisdiction and
e-commerce


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.”



¬ 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.



“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.”

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.”


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.”


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

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.”

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.


Privacy


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.

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.”


United Food and Commercial Workers, Local 401 v Alb
, 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.”


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.”


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.”


Canada’s Anti-Spam Law
(CASL)


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.


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-recomm


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.”

Liability for
Automated Processes


National Rugby League Investments Pty Limited v Sing
[2012] FCAFC 59 (April 2012)
¬ Legality of TV Now service enables a subscriber to have free to air television
programmes recorded as and when broadcast and then played back at the
time (or times) of the subscriber’s choosing on the subscriber’s compatible
Optus mobile device or personal computer.
¬ we consider that Optus’ role in the making of a copy – ie in capturing the
broadcast and then in embodying its images and sounds in the hard disk – is
so pervasive that, even though entirely automated, it cannot be disregarded
when the “person” who does the act of copying is to be identified.”
¬ “So one comes back to the question of construction raised by the word “make”
and its application in the present setting. As we have indicated, Optus not only
has solicited subscriber utilisation of its Service, it has also designed and
maintained a sophisticated system which can effectuate the making of
recordings wanted for viewing by subscribers. For s 101 purposes, it manifestly
is involved directly in doing the act of copying. It counts as a maker of copies
for the subscriber. Does the subscriber as well?


National Rugby League Investments Pty Limited v Sing
[2012] FCAFC 59 (April 2012)
¬ If one focussed not only upon the automated service which is held out as able to
produce, and which actually produces, the copies but also on the causative agency
that is responsible for the copies being made at all, the need for a more complex
characterisation is suggested. The subscriber, by selecting the programme to be
copied and by confirming that it is to be copied, can properly be said to be the
person who instigates the copying. Yet it is Optus which effects it. Without the
concerted actions of both there would be no copy made of a football match for the
subscriber. Without the subscriber’s involvement, nothing would be created; without
Optus’ involvement nothing would be copied. They have needed to act in concert to
produce – they each have contributed to – a commonly desired outcome. The
subscriber’s contributing acts were envisaged by the contractual terms and
conditions. How they were to be done were indicated by the prompts given on the
Optus TV Now TV guide page. The common design – the production of the selected
programme for transmission to the subscriber – informed the solicitation and the
taking of a subscription by the subscriber; it was immanent in the service to be
provided.
¬ In consequence, they could both properly be said to be jointly and severally
responsible for the act of making the copies.”


Australian Competition and Consumer Commission v G
[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.”


Australian Competition and Consumer Commission v G
[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.”

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.)).”


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…”


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…”


Social Media Issues


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.

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.

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.”


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.


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.


Patents, Trade-Secrets
and Trade-marks


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).


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.


Rosetta Stone Ltd. v. Google Inc., 676 F.3d
144 (4th.Cir.2012)
¬ Does use of a trade-mark as a keyword infringe a trade-mark in the U.S.?
¬ “we assume for purposes of this appeal that Google's policy permitting advertisers
to use Rosetta Stone's marks as keywords in the AdWords program and to use
Rosetta Stone's marks in the text of advertisements constituted an unauthorized
use "in commerce" and "in connection with the sale, offering for sale, distribution, or
advertising of any goods or services." 15 U.S.C. § 1114(1)(a). The only question for
us on Rosetta Stone's direct trademark infringement claim is whether there is
sufficient evidence for a finder of fact to conclude that Google's "use" of the mark in
its AdWords program is "likely to produce confusion in the minds of consumers
about the origin of the goods or services in question.”
¬ “Google's internal studies suggested the unrestricted use of trademarks in the text
of an advertisement might confuse Internet users.... Google expected a substantial
boost in revenue from the policy change [to permit use of trademarks as keywords]
as well as an uptick in litigation from trademark owners.”
¬ “we conclude that there is sufficient evidence in the record to create a question of
fact on each of the "disputed" factors—intent, actual confusion, and consumer
sophistication—to preclude summary judgment.”

Rosetta Stone Ltd. v. Google Inc., 676 F.3d
144 (4th.Cir.2012)
¬ “The functionality doctrine simply does not apply in these circumstances. The
functionality analysis below was focused on whether Rosetta Stone's mark
madeGoogle's product more useful, neglecting to consider whether the mark
wasfunctional as Rosetta Stone used it. Rosetta Stone uses its registered mark as a
classic source identifier in connection with its language learning products. Clearly,
there is nothing functional about Rosetta Stone's use of its own mark; use of the
words "Rosetta Stone" is not essential for the functioning of its language-learning
products, which would operate no differently if Rosetta Stone had branded its
product "SPHINX" instead of ROSETTA STONE... Once it is determined that the
product feature—the word mark ROSETTA STONE in this case—is not functional,
then the functionality doctrine has no application, and it is irrelevant whether
Google's computer program functions better by use of Rosetta Stone's nonfunctional
mark.”
¬ “As the case progresses on remand, Google may well be able to establish that its
use of Rosetta Stone's marks in its AdWords program is not an infringing use of such
marks; however, Google will not be able to do so based on the functionality doctrine.
The doctrine does not apply here, and we reject it as a possible affirmative defense
for Google.”

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.

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).”


Copyright*

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


Bill C-11
¬ The Bill will:
¬ implement the rights and protections of the World Intellectual Property
Organization (WIPO) Internet treaties;
¬ provide a new right of enablement;
¬ clarify the roles and responsibilities of ISPs and search engines;
¬ providing expanded exceptions for education;
¬ provide exceptions for encryption research, security testing, and
technical computer processes;
¬ protect Technological Protection Measures (TPMs);
¬ create new individual exceptions to permit format shifting, time shifting,
making back-up copies, creating and disseminating UGC works;
¬ reduce statutory damages where purpose is non-commercial;
¬ C-11 passed Third Reading in the House of Commons and was given
First Reading in the Senate on June 18, 2012.


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


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?


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


Oracle v Google 2012 WL 1964523 (N.D.Cal. May
31, 2012)
¬ “As long as the specific code written to implement a method is different, anyone
is free under the Copyright Act to write his or her own method to carry out
exactly the same function or specification of any and all methods used in the
Java API. Contrary to Oracle, copyright law does not confer ownership over any
and all ways to implement a function or specification, no matter how creative the
copyrighted implementation or specification may be. The Act confers ownership
only over the specific way in which the author wrote out his version. Others are
free to write their own implementation to accomplish the identical function, for,
importantly, ideas, concepts and functions cannot be monopolized by copyright.”
¬ “As for classes, the rules of the language likewise insist on giving names to
classes and the rules insist on strict syntax and punctuation in the lines of code
that declare a class. As with methods, for any desired functionality, the
declaration line will always read the same (otherwise the functionality would be
different) — save only for the name, which cannot be claimed by copyright.
Therefore, under the law, the declaration line cannot be protected by copyright.
This analysis is parallel to the analysis for methods. This now accounts for
virtually all of the three percent of similar code.”


SAS Institute v World Programming Limited
ECJ 2 May 2012

“On the basis of those considerations, it must be
stated that, with regard to the elements of a computer
program which are the subject of Questions 1 to 5,
neither the functionality of a computer program nor the
programming language and the format of data files
used in a computer program in order to exploit certain
of its functions constitute a form of expression of that
program for the purposes of Article 1(2) of Directive
91/250.”


SAS Institute v World Programming Limited
ECJ 2 May 2012
¬ “In the present case, the keywords, syntax, commands and combinations of
commands, options, defaults and iterations consist of words, figures or
mathematical concepts which, considered in isolation, are not, as such, an
intellectual creation of the author of the computer program. It is only through the
choice, sequence and combination of those words, figures or mathematical
concepts that the author may express his creativity in an original manner and
achieve a result, namely the user manual for the computer program, which is an
intellectual creation (see, to that effect, Infopaq International, paragraph 45)...”
¬ “Consequently, in the light of the foregoing considerations, the answer to Questions
8 and 9 is that Article 2(a) of Directive 2001/29 must be interpreted as meaning that
the reproduction, in a computer program or a user manual for that program, of
certain elements described in the user manual for another computer program
protected by copyright is capable of constituting an infringement of the copyright in
the latter manual if – this being a matter for the national court to ascertain – that
reproduction constitutes the expression of the intellectual creation of the author of
the user manual for the computer program protected by copyright.”


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. “


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.”


Roadshow Films Pty Ltd v iiNet Ltd [2012]
HCA 16 (20 April 2012)

¬ “For the reasons that follow, in our opinion, the conduct of
iiNet did not constitute authorisation of its customers’
infringing acts.
¬ The appellants’ submission, that iiNet should be taken to
have authorised the infringements unless it took measures
with respect to its customers, assumes obligations on the
part of an ISP which the Copyright Act does not impose. A
consideration of the factors listed in s 101(1A) does not
permit a conclusion that iiNet is to be held liable as having
authorised the infringements.”


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.


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.


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.”


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.”


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?”


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? “


Slides available @
barrysookman.com and
mccarthy.ca

* Underlines in quotes may reflect emphasis added.


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