Protecting Graphical User Interfaces

Apple - Display Screen with User Interface and Electronic IconSometimes Intellectual Property protection available to software developers appears to be inadequate.  Legal professionals serving the software industry are forced to work within confines set by the “traditional” forms of Intellectual Property protection of Patents, Designs, Copyright and Trademark.  The problem has become more acute since the Alice Corporation decision in the United States limited those instances in which patent protection is available.
However, software developers and legal professionals serving the software industry, such as myself, can learn new tricks by watching what industry leaders Apple Corporation (hereinafter Apple) and Samsung Corporation (hereinafter Samsung) are doing.  Apple has filed 531 Design applications in Canada.  Samsung has filed 227 Design application in Canada.
Under the Canadian Industrial Design Act, “design or industrial design means features of shape, configuration, pattern or ornament and any combination of those features that, in a finished article, appeal to and are judged solely by the eye.  Similarly, the US Patent Act refers to, “any new, original, and ornamental design for an article of manufacture…”
Design protection traditionally has been used to protect the ornamental shape and appearance of chairs, lamps, telephones and various consumer objects. In the past few years, Apple, Samsung and others have expanded the use of Design protection to protect not only the physical shape of their products but also their software development and implementation.  Among the Design applications filed by Apple and Samsung one can find applications with titles like:
“Display Screen with Font”
“Display Screen with Icon”
“Display Screen with Graphical User Interface and Electronic Icon”
“Display Screen with Graphical User Interface”.

The reader will note that Apple and Samsung are using Design law to protect Graphical User Interfaces, fonts and icons.   Each Design reflects what a viewer would see on their screen.

Complaint Websites use of Parody

The Federal Court decision by Mr. Justice Phelan on June 23, 2017 in the case of United Airlines, Inc v. Jeremy Cooperstock provides some guidance to persons considering establishing complaint websites.

Cooperstock operated a complaint website under the domain name UNTIED.com, which he registered and launched on or about April 24, 1997. Cooperstock chose the domain name UNTIED.com as a play on the word “United”, so as to highlight the disconnection and disorganization that he perceived in the company.  UNTIED.com operated as a consumer criticism website where visitors  could find information on United, submit complaints about United, and read complaints about United dating back to 1998 in the database of complaints.

Following a redesign of UNTIED.com in September 2011, United became aware of a strong resemblance between UNTIED.com and the United Website. UNTIED.com was updated again in June 2012 to mirror the United Website design launched in March 2012.  United contacted Cooperstock, and Cooperstock made certain alterations to UNTIED.com.  He changed the colour of the T and I in the Untied Logo to red (from blue) and changed a frown on the Frowning Globe Design to red (from blue).  He also added a disclaimer and a pop-up dialogue box to the website indicating that this was not the website of United. The disclaimer, stating “(This is not the website of United Airlines)”, was placed at the top of the website in small black type – next to  a graphic identifying “Untied” as “An Evil Alliance Member”.

Justice Phelan noted that parody and satire are not defences to trademark infringement.  Justice Phelan quoted from the Green v Schwarz case, “notwithstanding that the Defendant is obviously spoofing the Plaintiff’s trade mark, he is also cashing in on the goodwill that the Plaintiff has obtained for its trade mark”.    A Trademark confusion analysis was then performed.
“ Cooperstock’s obvious imitation of the United Marks and the United Website is meant to cause visitors to associate UNTIED.com with the United. The small details differentiating the marks are less important than the general appearance of the marks and of the websites. Cooperstock attempted to differentiate the two Globe Design marks by “zooming in” on the image to show that his globe mark included a red frown. This would not be the approach of the hurried consumer with an imperfect recollection. Further, consumers would not be engaging in a side-by-side comparison of the two marks, particularly if they are unaware that there is any need to be diligent in this regard (i.e., if they are not aware that a “spoof” website exists).  I find that there was ample evidence adduced to support a finding that there is a likelihood of confusion.  The changes that Cooperstock made to the United Marks were small and were designed to maintain his core purpose: identification of his website with United.”

Justice Phelan noted that although parody is not a defence to trademark infringement. parody may be a defence to copyright infringement in that parody is now an allowable purpose under s 29 of the Copyright Act, which  reads:
29 Fair dealing for the purpose of research, private study, education, parody or satire does not infringe copyright. (emphasis added)

Mr. Justice Phelan  held that the alterations to  United’s copyright materials  constituted parody:
“Parody should be understood as having two basic elements: the evocation of an existing work while exhibiting noticeable differences and the expression of mockery or humour. In my view, UNTIED.com falls within the definition of parody described above: it evokes existing works (the United Website, the United Logo, and the Globe Design) while showing some differences (such as content and disclaimers), and it expresses mockery (and criticism) of the United.”

Justice Phelan then  considered whether the use of parody in this context was “fair dealing”; as Cooperstock  was required to prove that his dealing with the work of United  had been fair in order to obtain the protection of s. 29 of the Copyright Act.
“It is unclear why substantial copying of the United Website or the other copyrighted works was necessary in order to meet the parodic goal of humorously criticizing the United; as discussed above, parody requires humour, whereas Cooperstock’s website was simply mean-spirited. The minimal use of certain parodic elements in the past (i.e., “fly the unfriendly skies” and the wordplay between “united” and “untied”) present an example of an alternative to the current dealing. Indeed, if the Cooperstock truly wished the best outcome for the United’s passengers, it is unclear why he would run any risk of confusing passengers.   In my view, it is the substantial copying of the United’s copyrighted material that is having a harmful impact, not the criticism contained on UNTIED.com. Negative commentary regarding the United abounds on the internet. United is not so much concerned with the informational aspect of UNTIED.com (which may lead customers to purchase tickets with other airlines) as it is with the potential that customers will believe they are interacting with the United when they are actually interacting with UNTIED.com (which may, in turn, cause customers to believe that the United is unprofessional or that it does not respond to complaints).”
In his reasons for Judgement, Justice Phelan summarized Mr. Cooperstock’s position as follows:
“Parody is not simply a defence to copyright infringement – it is also an aspect of free speech. However, like all free speech, it is not unrestricted.  Cooperstock’s website meets the first step of the CCH test, as it is for the allowable purpose of parody, but it does not meet the second step of the test. The questionable purpose of the dealing, amount of the dealing, and effect of the dealing all weigh in favour of the conclusion that this dealing is not fair.”
“in this case, Cooperstock sailed too close to the wind – and he was put up on the rocks”.

.CA Domain Name Disputes

The Canadian Internet Registration Authority (CIRA) has a mechanism for resolving domain name disputes.  This domain name dispute resolution mechanism is available to all Trademark owners. A CIRA panel hearing a domain name dispute has the power to order the transfer of a domain name from an offending party to a complainant.

It is important to note that once a CIRA panel has made a ruling in a first proceeding, there is nothing in the rules of CIRA that prevents a second proceeding from being initiated relating to the same domain name issue involving the same two parties.  This is exactly what happened concerning the Trademark PicMonkey.  A first CIRA panel ruled against the complainant, as there was inadequate evidence on two keys issues.   The first issue was a lack of evidence that the complainant had used the Trademark in Canada prior to the offending party registering their domain name.  The second issue was a lack of evidence that would tend to show “bad faith” on the part of the offending party.

The complainant consulted a legal firm familiar with domain name disputes.  It was determined that there was sufficient evidence on those two key issues.  Prior to the domain name being registered by the offending party, the complainant’s PicMonkey site had been accessed over 41,000 times by Canadian IP addresses.   There was also evidence that the offending party was a “cyber-squatter” who tied up domain names to a number of well-known third party brands. A second proceeding was launched and a second CIRA panel ruled in the complainant’s favour ordering the offending party to transfer the domain name to the complainant.

There are a number of lessons to be learned from the PicMonkey experience.  The first lesson is that it is critical that a Trademark owner place before any CIRA panel the best possible evidence.  A CIRA panel will only order the transfer of a domain name when the evidence is clear.  The second lesson is that, if you are a complainant who has handled a first CIRA proceeding yourself and messed up, it is possible to retain competent legal counsel and launch a second proceeding with better evidence.

“Fair Dealing” under Copyright Law

“Fair Dealing” allows persons who qualify under one of the relevant sections of the Copyright Act to copy portions of literary works without a licence from the authors.  The leading case on “fair dealing” is the Supreme Court of Canada decision in CCH Canadian Ltd v Law Society of Upper Canada in which a law library was making copies of legal cases for lawyers doing legal research.   On July 12, 2017 the Federal Court rendered a decision in Access Copyright v York University relating to “fair dealing” by educational institutions.

The Canadian Copyright Act provides for collective societies, being organizations that manage licensing schemes for multiple creators/authors.  Access Copyright is such a collective society.  Access Copyright represents tens of thousands of writers, visual artists and publishers, and licenses the copying of their works to educational institutions, businesses, governments and others.

Between 2005 and 2011, York University had a license to copy literary works with Access Copyright.  During that period, York University copied 122 million print exposures for use in course packs – an average of 17.5 million exposures per year. Each student at York University would receive 387 exposures per year in course packs, 80% of which came from books.

In 2011, York University decided to “opt out” of their license with Access Copyright, instead electing to  copy under its own “fair dealing” Guidelines. Between 2011 and 2013, York University outsourced the majority of its course pack production to three external copy shops which copied between 4.4 million and 7.6 million exposures per year – 90% of which were from books.
The Supreme Court of Canada decision in CCH Canadian Ltd v Law Society of Upper Canada case provided the following guidance to lower courts considering fair dealing:
•                     The analysis is a two-step process: first, the authorized purpose (in this case education) must be established and second, the dealing must be fair;
•                     “Fair” is not defined and is a question of fact depending on the circumstances of each case; and,
•                     The fairness analysis engages six non-exhaustive factors:
a)                  purpose of the dealing,
b)                  the character of the dealing,
c)                  the amount of the dealing (amount of copying),
d)                 alternatives to the dealing,
e)                  the nature of the work, and
f)                   the effect of the dealing on the work.

In the Access Copyright v York University decision, the Federal Court noted that, other than the legal principles annunciated in CCH, that decision is more of a burden than a benefit to York University. One important distinction is that the copying done at the Law Library was for others, not for the Library itself. In York University’s situation, the copying and the Guidelines serve York University’s interests and those of its faculty and students. There is an objectivity in CCH which is absent in York University’s case.
Of even greater significance is that in CCH, the copying at issue was that of a single copy of a reported decision, case summary, statute, regulation, or limited selection of text from a treatise. It was not the mass copying of portions of books, texts, articles, entire artistic work, or portions of collections, nor was it the multiple copying of those materials into course packs or digital formats.   There were a number of other differences which included:
•                     Copying at a single location under the supervision and control of research librarians in the Library contrasted with no effective supervision, control, or other method of “gatekeeping” at York University;
•                     A policy strictly applied and enforced by librarians versus virtually no enforcement of the Guidelines by anyone in authority at York University;
•                     Single copies made versus multiple copies;
•                     A large amount of ad hoc or situational copying for users at the Library contrasted with the mass systemic and systematic copying at York University; and,
•                     An absence of negative impacts on publishers in CCH as contrasted with the negative impacts on creators and publishers caused or at least significantly contributed to by York University.

The Guidelines permitted copying of up to 10% or one chapter of a book. The Federal Court noted that these copying thresholds of York University were arbitrary and expressed the view that a failure to justify the choice of thresholds seriously undermined the overall fairness of the York Guidelines.   The Federal Court noted that under the terms of the Guidelines, in some situations the permitted copying could encompass 100% or such a large part of a work as to appropriate the whole (e.g. for a journal article in a periodical, a short story in an anthology, or a chapter in an edited book). The Federal Court noted that York University had no means of meaningful control or monitoring of compliance with the Guidelines.

The Federal Court accepted evidence from experts that the Guidelines have had a significant negative impact, summarized as follows:
•                     They contributed to a drop in sales and accelerated the drop in unit sales – up to 6.9% per year and 3.4% in revenues between 2012 and 2015. Precise allocation of the amounts attributable to the Guidelines is not possible, but it was a material contribution.
•                     They caused a loss of revenue to creators and publishers as evidenced by the loss of licensing income. The range of loss to Access Copyright alone is between $800,000 and $1.2 million per year.
•                     Actual and expected loss of licensing income resulting from the Guidelines has a negative impact on publishers. Licensing revenues represented about 20% of publishers’ revenues.
•                     Actual and expected loss of licensing income has a negative impact on creators. A survey confirmed the importance of licensing revenue to writers and the materiality of a loss of revenue.
•                     On a balance of probabilities and recognizing the inherent unreliability of predicting the future, there are likely to be adverse long-term impacts of the Guidelines on investment, content, and quality.

The Federal Court concluded that the Guidelines established by York University were not “fair” and, as such, copying under the terms of the Guidelines constituted copyright infringement.  There will now be a determination of the amount of compensation that York University will be required to pay to Access Copyright for the infringement.  Numerous Universities established Guidelines similar to those of York University.  This decision will, without question, impact educations institutions across Canada.

Supreme Court of Canada Decisions regarding Intellectual Property

It used to be that decades would go by without any Intellectual Property cases being considered by the Supreme Court of Canada (SCC).   The fact that there have been two significant SCC decisions on Intellectual Property within a period of 3 days at the end of June, is indicative of the importance of Intellectual Property in the new economy.

It is difficult to “police” the internet, due to the fact that the internet is worldwide and Court orders are unenforceable outside of the nation that granted them. On June 28, 2017 the SCC decided the Google Inc v. Equustek Solutions Inc. case.  In that case, Equustek (E) obtained an interim injunction prohibiting an infringer, D, from selling infringing products. D disappeared and, in a blatant breach of the injunction, continued sales over the internet.  A lower Court ordered that Google de-index the website of D from the search results on Google.  Google immediately complied, de-indexing the website of D from the Canadian search results available to Canadians through the Canadian default website, google.ca.   However, D continued its infringing activities and the website of D continued to be available on Google, except for google.ca.  E sought a Court order directing Google to de-index D’s websites from ALL Google search results worldwide and not just the Canadian search results.  Google resisted on the basis that the Canadian Court Order should not be given effect outside of Canada. The matter was appealed first to the British Columbia Court of Appeal and then to the SCC.

The SCC upheld the lower court order that required Google to de-index D’s website from search results worldwide, stating as follows:
“Where it is necessary to ensure the injunction’s effectiveness, a court can grant an injunction enjoining conduct anywhere in the world. The problem in this case is occurring online and globally. The Internet has no borders — its natural habitat is global. The only way to ensure that the interlocutory injunction attained its objective was to have it apply where Google operates — globally. If the injunction were restricted to Canada alone or to google.ca, the remedy would be deprived of its intended ability to prevent irreparable harm, since purchasers outside Canada could easily continue purchasing from D’s websites, and Canadian purchasers could find D’s websites even if those websites were de‑indexed on google.ca.”

“Google’s argument that a global injunction violates international comity because it is possible that the order could not have been obtained in a foreign jurisdiction, or that to comply with it would result in Google violating the laws of that jurisdiction, is theoretical. If Google has evidence that complying with such an injunction would require it to violate the laws of another jurisdiction, including interfering with freedom of expression, it is always free to apply to the British Columbia courts to vary the interlocutory order accordingly.”

A number of patents have been found to be “invalid” by lower Courts based on the so-called “Promise Doctrine”.   The Promise Doctrine created a higher threshold for utility based on the “promises” in the patent. Under the Promise Doctrine, where the specification of a patent does not promise a specific result, a “mere scintilla” of utility is sufficient; but where the specification sets out an explicit “promise,” utility will be measured against that promise. On June 30, 2017 the SCC decided the AstraZeneca Canada v. Apotex case.  A lower Court held that the AstraZeneca patent was invalid for lack of utility under the Promise Doctrine, as it promised more than it could provide. The matter was appealed to the Federal Court of Appeal and then to the SCC. AstraZeneca argued its patent was improperly invalidated on the basis of the Promise Doctrine.

In the result, the SCC found the Promise Doctrine to be unsound and characterized it as an interpretation of the utility requirement that is incongruent with both the words and the scheme of the Patent Act. The SCC held that the Promise Doctrine is excessively onerous in two ways: (1) it determines the standard of utility that is required of a patent by reference to the promises expressed in the patent; and (2) where there are multiple expressed promises of utility, it requires that all be fulfilled for a patent to be valid.  To determine whether a patent discloses an invention with sufficient utility, courts must first identify the subject matter of the invention. Second, courts must then ask whether that subject matter is useful, that is, whether it is capable of a practical purpose. The Act does not prescribe the degree of usefulness required, or that every potential use be realized. Therefore, a single use related to the nature of the subject matter is sufficient, and that utility must be established by either demonstration or sound prediction as of the filing date.

These decisions by the SCC are most welcome by the patent profession.  A patent holder no longer has to be concerned about an attack on the validity of the patent based upon the Promise Doctrine.  Should an infringer ignore a Court injunction obtained by the patent holder, steps can be taken to have companies that control search engines, such as Google, de-index the infringer’s website so that they no longer appear in the search results.

What is the significance of Posting Materials on the Internet?

The definition of the word “publication” in the Canadian Copyright Act is a follows:
2.2 (1) For the purposes of this Act, publication means
(a) in relation to works,
(i) making copies of a work available to the public,
(ii) the construction of an architectural work, and
(iii) the incorporation of an artistic work into an architectural work, and
(b) in relation to sound recordings, making copies of a sound recording available to the public,
but does not include
(c) the performance in public, or the communication to the public by telecommunication, of a literary, dramatic, musical or artistic work or a sound recording, or
(d) the exhibition in public of an artistic work.

Section 77 of the Copyright Act has a provision allowing persons to obtain permission from the Copyright Board to use copyright materials, if the owners of the copyright materials cannot be located.  There have been two recent applications before the Copyright Board relating to materials that were posted on the Internet.  One application for permission to use related to a comment that was posted in a “Comments” section of an online news service.  The other related to a YouTube video.
After review, the Copyright Board was satisfied that the copyright owners were not locatable, and indicated that they would be prepared to grant permission in the form of a non-exclusive license, if the comment and the YouTube video were considered to be “published”.   However, neither the comment nor the YouTube video were intended to be downloaded.  The comment was merely viewable on the website of the news service and the YouTube video was intended to be streamed rather than downloaded.  The Copyright Board noted that under section 2.2 of the Copyright Act “publication” expressly does not include “communication to the public by telecommunication”.  The Copyright Board reached the conclusion that any materials posted on the internet (that are not intended to be downloadable) are merely communication to the public by telecommunication and thus are not “published” for the purposes of the Copyright Act.
I must confess that I have never had occasion to critically review the exceptions to “publication” contained in the definition of publication, until now.   Relying merely upon common sense, I assumed that if the entire world could view the copyright materials on the internet, that they were published.  I was wrong!
This finding by the Copyright Board potentially has significant implications.  There are many provisions in the Copyright Act that treat unpublished materials differently from published materials.   Materials that are merely posted to the Internet without the intention that they be downloaded are now considered to be unpublished materials. This will likely spawn further cases and commentary, which we will report to you as they are “communicated to the public by telecommunication”.

Private Right of Action under Canada’s Anti-Spam Law

When Canada’s Anti-Spam Law (CASL) came into effect in 2014, certain sections relating to a “private cause of action” enforced through the Courts did not take effect until 1 July 2017.  With the date of 1 July2017 rapidly approaching, this article will review what this private cause of action may mean to individuals and businesses.  There must be an underlying commercial purpose to trigger the application of CASL and there must be an absence of express consent.  The prohibited activities CASL is intended to capture are the sending of unsolicited electronic messages (section 6), the diverting of electronic messages to another destination (section 7) and the installing of a computer program on another person’s computer system (section 8).
To this point,   the Canadian Radio-Television and Telecommunications Commission (CRTC) has been the only entity with the ability to enforce CASL.   As of 1 July, the “private right of action” comes into effect and organizations that are not CASL compliant, will be subject to lawsuits brought by affected individuals.  The legislation will allow affected individuals to sue organizations and their officers, directors and agents for alleged CASL violations.  If, after a hearing, the Court is satisfied that the Defendant/Respondent has engaged in prohibited activities, the Court has the power to order the Defendant/Respondent to pay to the Plaintiff/Applicant compensation for actual loss or damages suffered, along with monetary penalties.   The maximum monetary penalty for sending unsolicited electronic messages is $200 for each message, to a maximum of $1,000,000 per day.  The maximum monetary penalty for diverting electronic messages is $1,000,000 per day.  The maximum monetary penalty of installing computer programs on another person’s computer is $1,000,000 for each contravention.   Of course, the Court is not going to order the maximum in each case.  The Court will consider the nature and scope of the prohibited activities, the financial benefit obtained from the prohibited activities, any history of previous contraventions, the compensation awarded to the Plaintiff/Applicant, and  the Defendant/Respondent’s ability to pay.
It is apparent that there are financial incentives now in place to entice persons who are aggrieved to launch this new private right of action under CASL.  If you do business on the internet which involves the extensive use of email, care must be taken to ensure that you have mechanisms to secure express consent, so that your activities do not become prohibited activities.  If the business you do on the internet has been adversely affected by a third party who has engaged in prohibited activities, you may seriously consider launching an action under CASL to  obtain compensation for your losses, along with whatever monetary penalty you can convince the Court is warranted to curb such activities in future.

Use of Photographs

A number of years ago I was asked to rescue an advertising agency.  The advertising agency required a picture of a dancer for the advertising campaign for a large company.  The advertising agency had obtained clearance from the photographer, but had not paid any attention to the identity of the dancer in the picture.  For their purposes, it did not matter as long as a dancer was depicted.  It turned out that the dancer was famous and regularly charged a fee for endorsing any product or service.  All licensing of the dancer’s image was done through a licensing agency, which instructed a legal firm to contact the large company.  My client, the advertising agency, took the “high road” and undertook to bear the cost of rectifying their mistake.  I negotiated a licensing fee, which the advertising agency promptly paid.  However, they had learned a rather expensive lesson.  As I am a lawyer and the matter was settled out of court, in light of the duty of confidentiality that I owe my clients, I am unable to divulge the identity of my client, the identity of the large company, the name of the famous dancer or the settlement amount.

To be clear, it is not necessary for a person to be famous for him or her to have the right to demand a royalty or license fee for use of their image in advertising.  For example, under the British Columbia Privacy Act, it is a tort (meaning it is illegal) for a person to use the name or portrait of another for the purpose of advertising or promoting the sale of, or other trading in, property or services, unless that other, or a person entitled to consent on his or her behalf, consents to the use for that purpose.  Though, to be clear, a person is not liable to another for the use, for such  purposes, of his or her portrait in a picture of a group or gathering, unless the person complaining of the use of the picture is (a) identified by name or description, or his or her presence is emphasized, whether by the composition of the picture or otherwise, or (b) recognizable, and the person who used the picture, by using the picture, intended to exploit the plaintiff’s name or reputation.  Many other jurisdictions have similar laws.

The recent case of Saad v. Le Journal de Montreal, illustrates the more common issue with use of photographs or images, being infringement of copyright (rather than unauthorized use of a person’s image). Le Journal de Montreal was doing an article on a person and asked that she provide a photograph to be used along with the article.  Le Journal de Montreal did not pay attention to the identity of the photographer or ascertain ownership of copyright in the photograph.  The photographer sought compensation for the unauthorized use of the photograph.  Le Journal de Montreal first argued that they had no knowledge that their use of the photograph would constitute infringement.   The Court did not accept that argument as newspapers regularly have to deal with photographs and the photographers name was on the photograph.   Le Journal de Montreal then argued that they fit into an exception provided in the Copyright Act that allows use of a photograph as “fair dealing” for the purpose of news reporting.  The Court noted that in order to invoke the “fair dealing” exception Le Journal de Montreal would have had to acknowledge the source of the photograph by giving the photographers name.  Furthermore, the photo had nothing directly to do with the subject matter of the news article and, therefore, was not “for the purpose of news reporting”.  In the result the photographer was awarded $2000 plus costs.

Legal firms with experience in intellectual property, such as Thompson Cooper, are asked to address these type of issues relating to photographs relatively often.   Parties wishing to use a photographs of persons should be aware that proper authorization  may require  not only the consent of the copyright owner, but also, in some circumstances, the consent of the person who is the subject of the photograph.

CAT CHASES DOG (DANGERS ASSOCIATED WITH PUBLICLY ACCUSING A COMPETITOR OF INFRINGEMENT)

A client called me the other day to discuss some steps he wished to take against a competitor who was infringing his patent.    The client wanted to write letters to some major companies that were purchasing product from the competitor, to make them aware of the infringement and advise them that he would be forced to sue them if they continued to purchase the competitor’s product.  The second step he wished to take was to place an advertisement in a magazine widely read in the industry, to inform companies in the industry of the alleged infringing activity by the competitor.  I advised my client that there were some practical reasons why taking these steps might end in disaster.   Firstly, when you threaten companies with legal action, they are not inclined to do business with you.  In other words, it is bad for business to sue customers.  Secondly, when you make statements tending to discredit the business of a competitor you are “potentially” breaching section 7 (a) of the Trademarks Act which reads:
“No person shall make a false or misleading statement tending to discredit the business, wares or services of a competitor.”
My client protested that everything he was going to place in the letters and the advertisement was absolutely true.    In the recent Federal Court case of Excalibre Oil Tools V. Advantage Products, a businessman with the same attitude as my client found out the hard way the risks of making statements about a competitor that turned out to be false.   Advantage sent letters to customers of Excalibre alleging infringement of three patents. However, when the patent infringement action subsequently proceeded to Court, Advantage Products lost; the Court found key claims to be invalid and the remaining valid claims not to be infringed by Excalibre.  The case is presently proceeding to the “damages” phase to determine the amount Advantage Products is going to have to pay as compensation to Excalibre for making false and misleading statements that discredited the business of Excalibre.   Why give your competitor grounds to counter-claim?  If you believe your competitor is infringing, communicate directly with the competitor and, if the matter remains unresolved, sue.

Internet Cases on Websites involved with “Scraping”

“Scraping” occurs when a business pulls commercial content from the websites of other businesses using web crawlers or other technologies, and then uses that commercial content for its own commercial purposes.
On April 13, 2017, a decision was rendered in the United States in the case of Craigslist, Inc v. RadPad Inc.  Craigslist alleged that RadPad had “scraped” thousands of Craigslist user postings.  It also alleged that RadPad had harvested user contact information to send spam in an effort to entice Craigslist users to switch to RadPad’s competing service. The Court awarded $60.5 million in damages, including:  $40 million based upon violations related to harvesting from 400,000 emails, $20.4 million for copyright infringement based upon “scraping” commercial content from the Craigslist website, and $160,000 for breach of contract as the scraping activities breached the terms of use for the Craiglist website.
On April 6, 2017, a decision was rendered in Canada in the case of Trader Corporation v. CarGurus.  Trader and CarGurus are competitors in the digital marketplace for new and used vehicles in Canada.  CarGurus “scraped” car dealership websites for photos of cars for sale.  Of the 197,740 photos that were obtained and used by CarGurus, Trader was able to prove that 152,532 of the photos had been taken by photographers paid by Trader.  CarGurus argued that, as the images were located on the car dealership servers and not on CarGurus server, CarGurus had not reproduced the photos but had merely “framed” them.  The Court found that CarGurus had made the photos available to the public for commercial purposes and rejected the suggestion that the photos had not been “reproduced” and rejected any “fair dealing” defence.
CarGurus then  argued that it was entitled to the benefit of section 41.27 of the Canadian Copyright Act, which is intended to protect search engines such as GOOGLE and which reads:
Injunctive relief only — providers of information location tools
41.27 (1) In any proceedings for infringement of copyright, the owner of the copyright in a work or other subject-matter is not entitled to any remedy other than an injunction against a provider of an information location tool that is found to have infringed copyright by making a reproduction of the work or other subject-matter or by communicating that reproduction to the public by telecommunication.
Conditions for application
(2) Subsection (1) applies only if the provider, in respect of the work or other subject-matter,
(a) makes and caches, or does any act similar to caching, the reproduction in an automated manner for the purpose of providing the information location tool;
(b) communicates that reproduction to the public by telecommunication for the purpose of providing the information that has been located by the information location tool;
(c) does not modify the reproduction, other than for technical reasons;
(d) complies with any conditions relating to the making or caching, or doing of any act similar to caching, of reproductions of the work or other subject-matter, or to the communication of the reproductions to the public by telecommunication, that were specified in a manner consistent with industry practice by whoever made the work or other subject-matter available through the Internet or another digital network and that lend themselves to automated reading and execution; and
(e) does not interfere with the use of technology that is lawful and consistent with industry practice in order to obtain data on the use of the work or other subject-matter.

Meaning of information location tool
(5) In this section, information location tool means any tool that makes it possible to locate information that is available through the Internet or another digital network.

The Court rejected this defense.  The Court found that the section did not afford protection to providers, like CarGurus, that gathered information on the internet and made it available to the public on the provider’s own website.  CarGurus was not acting as merely a search engine.

Having won the case, Traders sought “statutory damages”, the provisions of which read:
Statutory damages
38.1 (1) Subject to this section, a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to in subsection 35(1), an award of statutory damages for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally,
(a) in a sum of not less than $500 and not more than $20,000 that the court considers just, with respect to all infringements involved in the proceedings for each work or other subject-matter, if the infringements are for commercial purposes.

If just the statutory minimum damages were granted, these damages would have amounted to $500.00 per photo x 152,532 photos owned by Trader for a total of $76,266,000.00.

However, the Judge felt that an award of $76,266,000 would be grossly out of proportion to the severity of the infringement and modified the award as a special case to $2 per photo x 152,532 photos owned by Trader for a total of $305,064.  In making this determination, the Judge applied section 38.1(3) of the Copyright Act, which reads:

Special case
(3) In awarding statutory damages under paragraph (1)(a) or subsection (2), the court may award, with respect to each work or other subject-matter, a lower amount than $500 or $200, as the case may be, that the court considers just, if
(a) either
(i) there is more than one work or other subject-matter in a single medium, or
(ii) the award relates only to one or more infringements under subsection 27(2.3); and
(b) the awarding of even the minimum amount referred to in that paragraph or that subsection would result in a total award that, in the court’s opinion, is grossly out of proportion to the infringement.

The factors that the Court considered in  deciding to treat this matter as a “special case” were the fact the CarGurus had not acted in bad faith and had, in fact, obtained a legal opinion that the conduct was permissible before engaging in the activity.  Unfortunately for CarGurus, the legal opinion was wrong because the lawyer involved incorrectly assumed that the photos belonged to the dealerships. Further, the Court felt that there was some bad faith on the part of Trader.  Although the parties had corresponded in an attempt to settle the dispute prior to litigation, Trader intentionally did not disclose the critical fact that Trader owned the photos until after litigation was commenced.

These cases will provide some guidance to those whose business model involves “scraping” content from the websites of others.