Breaking News for Online Businesses

There have been some recent court decisions that will be of interest to online businesses. Once an “online” business is successful, it is just a matter of time before competitors try to divert traffic intended for the successful business to their own competing websites.  One way of diverting traffic is through the use of websites with similar names.  With the rapid rise of social media, such as FACEBOOK, aggressive competitors are also establishing social media accounts with similar names.   Another way, a more legitimate way, is through the acquisition of “sponsored” links, such as GOOGLE ads.   These sponsored links appear in the search results whenever keywords associated with the successful business are entered into the search engine.

The old news is that in the case Michaels v. Michaels Stores Procurement Co, decided March 15, 2016, Canada’s Federal Court of Appeal stated that the Federal Court had jurisdiction to order the transfer of a confusing domain name.  The new development is that in the case of Thoi Bao Inc v. 1913075 Ontario Ltd, decided December 7, 2016, Madam Justice McDonald of the Federal Court went a step further and ordered the defendant to transfer to the plaintiff his FACEBOOK account, his TWITTER account and “any other social media accounts under his ownership or control” that were confusing with the business of the plaintiff.   In light of this decision, a successful business now has a remedy to use against competitors who are diverting traffic through the use of confusingly similar social media account names.

The other development relates to “passing off”, the court-created protection against trade misrepresentations.  In order to be successful in an action for “passing off”, among other things, the plaintiff must show that there has been misrepresentation creating confusion in the public.  The old news is that purchasing sponsored links, in and of itself, does not constitute “passing off”.   This was established in the Federal Court decision in Vancouver Community College v. Vancouver Career College (Burnaby) Inc., in which the Trial Judge held that the time frame for determining whether there was confusion was when the consumer reached and viewed the defendant’s website.   The Trial Judge found that there was nothing confusing at the defendant’s website and thus that any confusion was not sufficient to meet the requirements for “passing off”.  The new development is that on January 26, 2017 the Federal Court of Appeal reviewed the Trial Judge’s decision.  The Appeal Court determined that the Trial Judge had erred and that the correct time to assess confusion was when the consumer viewed the search engine results page.  The Court of Appeal noted that the sponsored link merely indicated VCCollege.ca, without any content that would distinguish the defendant’s business from that of the plaintiff.  In the circumstances, the sponsored link was confusing and constituted passing off.  If your successful business has been the target of intentionally confusing sponsored links, you now have a remedy.  Conversely, if your business pays for sponsored links, you must ensure that your sponsored links identify your business and are not confusing.

Attention Entrepreneurs!

I want to make entrepreneurs aware that they do not have to struggle alone, they can obtain assistance from VIATEC’s accelerator programs in order to fulfill the mission of increasing the number of successful technology companies that start and grow in the Greater Victoria area.

RevUP Program
Their RevUP Program focuses on the business challenges that technology companies with rapid-growth issues in British Columbia often encounter. By participating in RevUP, companies will be able to get personalized help with some of the common issues that hinder business growth: building scalable revenue and customer acquisition models, ensuring efficient operational processes and accessing capital opportunities. Individualized action plans, personal leadership coaching and targeted skill development are what make RevUP effective when it comes to addressing these needs. The benefits of the RevUP program include: Individualized action plans, Personal leadership coaching from Executives in Residence (EiRs), Targeted skill development, Professional support services from experts in marketing, sales, & IT, and Networking opportunities.

Venture Acceleration Program
Their venture acceleration program is designed to guide, coach and grow ambitious early-stage technology entrepreneurs. It is delivered by a team of Executives in Residence (EIRs) and supported by a province-wide network of mentors. The benefits of the Venture Acceleration Program include: Biweekly 1-on-1 coaching by Executives in Residence, Holding companies accountable to meeting goals, Personal experience running successful businesses, connections to networks (If I can’t help I know someone who can), broad reach to EiR network in BC, Reviews of proposals, pitch decks, etc, Exposure to mentors with diverse knowledge base, Networking with other startups to promote sharing of knowledge, talent, & resources, potential collaboration, Accelerator-only workshops targeting specific skills, Member only discounts on events, services (legal counsel, accounting, SEO), & partner programs, Connections to Accelerators across BC, Quarterly Reviews & ad-hoc meeting with full EiR panel & select mentors, Access to VIATEC’s job board & company listings, Promotional opportunities to be Tectorian of The Week, online News Releases, etc.

Entrepreneurship@Program
Similar to the venture acceleration program, their Entrepreneurship program is offered at no charge for a period of 6 months! This is perfect for the entrepreneur who expects to ramp their venture to a position of revenue and/or investment within the 6-month period.  The benefits of the Entrepreneurship Program include: Ensuring that the business basics have been established, Assisting with market definition, product fit and early adopter identification, Providing support and direction on business strategy, sales, marketing, Determining actions for market entry, including channels to market, partnership opportunities, key influencers, decision-makers and demand drivers, Leveraging existing relationships and knowledge to accelerate business development and help gain early traction.

For more information visit the VIATEC website at www.viatec.ca or email Rob Bennett rbennett@viatec.ca

Beware When You Advertise

A decision rendered by the Ontario Supreme Court on September 26, 2016 in a dispute between Bell Canada (Bell) and Cogeco Cable Canada (Cogeco) could have potential ramifications for your business and the way that you advertise. Bell and Cogeco directly compete for Internet customers in many Ontario communities. Cogeco commenced an advertising campaign in August 2016 using the slogan “the best Internet experience in your neighbourhood”.  Apparently, this slogan had the desired effect with customers gravitating to Cogeco (advertising works).  However, Bell offered packages with internet download speeds of up to 940 megabytes per second (Mbps), whereas the highest download speed offered by Cogeco was 250 Mbps.  Bell commenced legal proceedings under section 52(1) of the Competition Act, which reads:
52 (1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.
Historically, Courts have been slow to intervene in disputes over advertising in part because it is understood that advertising often involves a certain amount of exaggeration, referred to as “puffery”.  Bell argued that the claim of “best Internet experience” required substantiation.  Cogeco argued that there were a number of factors, other than just speed, that go into how a customer experiences their service and the reference to “best” should be considered to be mere “puffery”.   After considering the facts, the Court granted Bell an injunction, which forced Cogeco to discontinue its advertising campaign.  The Court did so on the basis that the public is not sophisticated in these matters.  Cogeco had altered the marketplace by claiming to be the “best”.  The representation made by Cogeco to the public was false and misleading.  There is no question that the strong public response to the advertising campaign was a factor in the Court’s decision to grant the injunction.  If you are launching an advertising campaign, you must be cognizant of the types of representations you are making in your advertising.  If your competitor launches an effective advertising campaign with representations that you consider to be false or misleading in a material respect, you may have recourse.

How Does Your Website Rate?

I like to spread the word when I think someone is doing something right.  Today I am excited about a communication I received from the Business Development Bank of Canada (BDC). I am on the email list for the BDC and receive notices regarding various articles, some of which I download and read.   I received an email offer for a free e-book entitled “Social Media – A Guide for Entrepreneurs”. I know I should improve my knowledge of and activity in Social Media, so I followed a link to the BDC website and signed up for the e-book.   The BDC website confirmed that an email had been sent to me with a link to download my free email.  Then the part I am really excited about occurred.  A message popped up on the BDC website offering a free website evaluation. I always like any kind of objective evaluation.  Your golf score objectively measures whether your golf game is improving.  A metronome objectively measures whether you are keeping time when playing music.  Now here was a tool for objectively measuring the website experience at the Thompson Cooper website.  The resulting report we received from the BDC for the tcllp.ca website was divided into four parts:  Accessibility (to mobile devices), Marketing, Website experience, and Technology (how well designed the website is).  In some areas, such as accessibility to mobile devices and date last amended (currency), the tcllp.ca website scored 10 out of 10.  However, in the Marketing area, the score was a dismal 4.3, with scores of 2 out of ten for meta-tags and 0 out of 10 for feeds (whatever they are).  Clearly there is work to do.  I would like to thank the Business Development Bank of Canada for the free e-book (which I intend to read).  I would also like to thank the BDC for the website evaluation which opened my eyes regarding the shortcomings of our website.   If you like free stuff, as I do, I urge you to go to get on the BDC email list.  For the things that you have missed, articles, social media book, and website evaluation, follow the link to the BDC website and check it out. https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/business-assessments/pages/free-website-evaluation.aspx

2016 Annual Meeting of the Intellectual Property Institute of Canada (IPIC)

convention-brochureOne can gain an understanding of issues that the profession is wrestling with by reviewing the titles of the presentations from the 2016 IPIC annual meeting.  Continuing Professional Development: “The Skill Set of the IP Practitioner of the Future – Where will IP be in 20 years?”  Trademarks: “Trademarks in Metatags and Keywords – A summary of the Current State of the Law in Canada as Contrasted with the U.S. and Europe”, “Brand Boot Camp”, “Best Practices before the Trademark Office”.  Patent Issues: “Patent Issues that Keep In-House Counsel Up at Night”, “Patentability:  Dealing with Challenges in IT and Life Sciences”, “Best Practices before the Patent Office”.  Online Issues: “Managing Online Content: Tips, Traps, and Tariffs for IP Practitioners”.  Rights Issues: “Publicity Rights: Guidelines for Giving Clients Practical Risk Assessments”.  Litigation Issues: “Remedies – Quick Results in Trademark Cases: Myth or Reality”, “Top IP Cases of the Year”, “Appellate Advocacy in Specialized Area of the Law”.
Many of the above issues I deal with on a regular basis and have written articles about over the past year.  However, the presentation of “Futurist” Jeremy de Beer was of general application and may be useful to the reader.  Mr. de Beer described an approach to predicting the future using a “grid”.  He creates this grid by placing a first line that represents a trend that one can see today, such as automation (self driving cars, smart homes with remotely controlled appliances).  One end of the line represents the present and the other end of the line represents the future, if the trend continues. He then places a second line crossing the first line at 90 degrees to create his “grid” having four quadrants.  The second line represents a second trend that one can see today, such as the increasing capability of smart phones. Again, one end of the line represents the present and the other end of the line represents the future, if the trend continues.  A first quadrant will predict what happens if neither trend continues, a second quadrant will predict what happens if the first trend continues and the second does not progress, a third quadrant will predict what happens if the second trend continues and the second trend does not progress, a fourth quadrant will predict what happens if both trends progress.  Mr. de Beer indicates when you extrapolate what may happen some of your “predictions” (especially in the fourth quadrant) should appear to be ridiculous.  If this does not occur, you are not pushing the trend far enough. Self driving cars and everyone carrying miniature computers that connect to the internet would have sounded ridiculous 20 years ago. It is not viewed as being ridiculous today.

 

Comment:  I received some comment from Keith Sketchley that I felt should be shared.  He indicated that one should beware of overly simplistic methodologies.  He identified two fundamental flaw, in the futurists approach that he described as follows:

1. Trends do not continue indefinitely, in part because people change behaviours. In technical things that’s called “feedback”.  For example, increasing prices of a product will be met by reduced consumption in response to prices, demand drops, suppliers lower their prices.
2. It is difficult to predict new products and services, and some predictions fall far short. For example, a professor gave a Mr. Smith a C, sneering at his idea that people would pay a premium for assured delivery timing of documents. Mr. Smith went on to start an industry, he called his company “Federal Express

Legal Actions Against Those Who Use Social Media

YELP is an online service that was founded in 2004 to help people find local businesses.  People can establish a YELP account for free.  Similarly, businesses can setup an account for free, post photos and send messages of special offers to their customers. YELP makes money by selling ads to local businesses, such as dentists, pet sitters and moving companies.  A feature of YELP is the ability of a customer to post a review of a business after he or she has used the services or products of the business.  Each review reflects a customer’s personal experience and “tells it like it was”.   This means that some of the reviews are beneficial to the reputation of a business, as they are “glowing” reviews that describe a positive experience.   This also means that some reviews are harmful to the reputation of a business, as they are “critical” reviews that describe a negative experience.  YELP does not permit paying advertisers to change or re-order the reviews they receive. YELP recently advised that some customers have received legal threats from businesses after posting critical reviews.  In some cases legal proceedings have actually been commenced.  One example given was a dentist, who on five different occasions has initiated legal actions against customers (former patients) who posted critical reviews.   Another example given was that of a professional pet sitting company who sued a customer after a critical review suggested that the pet sitter had killed their fish.  Another example given was that of a moving company who sued a customer after a critical review awarded them just one star. The objective of such legal actions is to get the critical reviews taken down.  YELP has expressed concern that the threat of legal action will silence customers who would otherwise post critical reviews.  In order to combat this activity, YELP has tagged certain business accounts with a “Consumer Alert” which is reproduced below:

Consumer Alert: Questionable Legal Threats
This business may be trying to abuse the legal system in an effort to stifle free speech, including issuing questionable legal threats against reviewers.  As a reminder, reviewers who share their experiences have a First Amendment right to express their opinions on YELP.

Freedom of speech is enshrined in United States law as part of the First Amendment to the United States Constitution.  In Canada, our equivalent is “The Canadian Charter of Rights and Freedoms”, which lists “fundamental freedoms, including “freedom of thought, belief, opinion and expression”.  Unlike their American counterparts, Canadian judges have given more weight to the value of personal reputation than to free speech. I recommend that Canadian customers posting critical YELP reviews stick to the facts.  Any embellishment that goes beyond the facts may give the business or an individual from the business an opening to sue under the laws of libel.

Limitations of Non-Disclosure Agreements

Non-Disclosure PhotoI recently read an article entitled “The scope and limitations of Non-Disclosure Agreements”.  The article explained that a non-disclosure agreement is an agreement in which a party receiving information (Receiving Party) agrees to take reasonable precautions to protect from disclosure information received from a party disclosing information (Disclosing Party).   The article then went on to list a series of matters that must be addressed in a well drafted non-disclosure agreement, including: identifying the information that is to be protected, identifying that the information is being disclosed in order to permit the Receiving Party to complete a specified task for the Disclosing Party, setting forth rules regarding disclosure to employees and safe storage of the information while the task is being undertaken and  requiring the destruction or return of the information when the Receiving Party has completed the specified task.  The article also touched upon remedies available to the Disclosing Party in the event of a breach of the agreement.  Although the article was well written, in my opinion, the author neglected to touch upon a significant limitation of non-disclosure agreements.   Most non-disclosure agreements contain the following provision: “The Receiving Party shall have no obligation with respect to such information where the information has become publicly known through no wrongful act of the Receiving Party”.   Entrepreneurs carefully go around and have non-disclosure agreements signed by parties who are assisting them by manufacturing and supplying components.   Non-disclosure agreements are also signed by parties who are assisting in the preparation of business plans, creating brand names and logos, setting up websites, and setting up marketing plans.  Finally, non-disclosure agreements are signed by parties being approached for investment capital and by parties being approached to assist in marketing and wholesale distribution.   Then on the day of the launch of the product or service, all of the Receiving Parties who signed non-disclosure agreements are released from their obligations, as the Disclosing Party has publicly released the information and thus that information has become “publicly known through no wrongful act of the Receiving Party”.     Non-disclosure agreements are fine for having preliminary discussions, but  once the Receiving Party is working with you, a further agreement needs to be put in place that prevents the Receiving Party from competing with you while they are working with you and for a period of time (for example 2 years) after they cease working with you.  As a practical matter, one or more of the parties you are relying upon as a member of your team may have better connections and more resources than you do.  Once they are released from their obligations under the non-disclosure agreement by your public disclosure, they may come to the realization that they are in an excellent position to deliver the product or service and they no longer need you.  Of course, they will delay acting until they have the opportunity to gauge the market response to your new product or service.  Get the additional agreements signed.  After you have taken all the risks and proven there is a market for the product or service, there will be imitators.  Make sure the imitators are not parties who you thought were members of your team.

THE NAME GAME – OBTAINING A TRADEMARK

This is a SLIDESHARE presentation given to the Better Business Bureau at a “Lunch N Learn” on August 17, 2016.    Some names that businesses choose are simply NOT PROTECTABLE.  This presentation is intended to make persons selecting business names aware of the rules used by the Trademarks Office in reviewing and approving Trademarks.  Included is an overview of unregistered and registered Trademarks.  If you are only acting locally and have no internet presence, it is not critical that you register your Trademark.  If you are doing business over the internet, it is critical that you obtain Trademark protect in Canada and in many cases also in the United States. http://www.slideshare.net/ThompsonCooperLLP/the-name-game-protecting-product-or-business-names

New Developments in the Canadian Music Business

SOCAN (the Society of Composers, Authors and Music Publishers of Canada) collects royalties based upon tariffs approved by the Copyright Board of Canada for Canadian performances of songs for Canadian and international songwriters and music publishers. Tariffs have been set for recorded or live music ranging from concerts to restaurants to fitness classes.  Of particular relevance to this article are the tariffs for performance of songs on the internet and on mobile devices. In May of 2016 SOCAN announced that it had acquired Seattle-based MediaNet.  This was followed by an announcement by SOCAN in July of 2016 that it had acquired New York-based Audiam.  As with all performing rights organizations, SOCAN’s main functions are firstly to determine what music is being performed and, secondly, to collect the applicable royalty prescribed by Canadian law.  Collection of royalties relating to the internet and mobile devices create technological challenges.   MediaNet has more than 51 million sound recordings in its database, each containing a unique audio identifier.  By acquiring MediaNet, SOCAN will be able to identify digital performances from around the world in real-time. Audiam similarly, has one of the world’s most complete databases of sound recording and underlying song/composition metadata.  In addition, Audiam has technology to proactively find works that are not licensed and for which royalties have not been paid. With the combined strength of MediaNet and Audiam, SOCAN can identify the use of music on digital services such as Spotify, Apple Music, YouTube, and Google Play.  When songs are performed, in addition to royalties compensating the songwriters and music publishers, there are also royalties compensating the artists who perform the songs and music recording companies.  Prior to acquiring Audiam, SOCAN was not involved in collecting royalties for performing artists and music recording companies.  In contrast, a significant portion of the business of Audiam was the collection of royalties for performing artists and music recording companies.  With the acquisition of Audiam, SOCAN now has the capability to collect songwriter-music publisher royalties and performing artist-music recording companies royalties.  With changes brought on by the internet, songwriters and performing artists had become frustrated by the ineffectiveness of the performing rights organizations in the collection of royalties, resulting in a fracturing, with new performing rights organizations being formed by the disenchanted.  Through its acquisition of MediaNet and Audiam, SOCAN has greatly increased its ability to be effective at identifying uses of music on the internet and collect royalties.   SOCAN’s acquisition of Audiam’s expertise in collecting royalties for performing artists and music labels, has been heralded by some commentators as an important new development that raises the possibility of SOCAN becoming a “one stop shop” on the Canadian music scene.  The fact that MediaNet and Audiam are U.S. based also suggests that SOCAN will become more active in collecting royalties in the United States.

Balancing of Interests under Copyright Law

johnny-automatic-scales-of-justice-300pxCopyright law often includes a consideration of a “balancing the rights”, usually balancing the rights of content users and the rights of content creators.  Some recent court decisions illustrate how this “balancing” takes place and explore some new issues in copyright law. Maltz v. Witterick (a decision issued by the Federal Court of Canada in May 2016) relates to balancing rights as between two competing content creators.  A writer by the name of Jennifer Witterick was “inspired” to write a fictional novel after viewing a documentary produced by Maltz and some others regarding the life of Francizska Halamajowa and her daughter Helena, who hid three Jewish families when the German army occupied Poland during the Second World War.   Upon becoming aware of the novel, Maltz noted a number of factual similarities between the documentary and the novel, and commenced an action for copyright infringement against the author Witterick and the author’s publisher.  By way of background, the Courts have long held that copyright does not apply to historical facts, such as the German occupation of Poland during the Second World War.  The Judge in Maltz v. Witterick noted that the novel was a fictional story aimed at young readers and had a much different “feel” than the documentary.  The only thing that had been taken were some factual underpinnings for the story.  Counsel for Maltz argued that there was a difference between historical facts in which no one can own copyright and “small facts” drawn from diary entries relating to events on a particular date. In  concluding that the writer Witterick’s use of some actual facts from the life of Halamajowa did not amount to infringement, the Judge made a finding that facts are facts and no one owns copyright in them no matter what their relative size or significance.  A second case, Geophysical Services Incorporated v. Encana et al (a decision of the Alberta Court of Queen’s Bench in April 2016) relates to balancing rights as between content creators and public authorities.  Geophysical Services Incorporated (GSI) was in the business of selling seismic data.   This seismic data was filed with a government board pursuant to a regulatory regime established under the Canada Petroleum Resources Act (CPRA).  After a period of 5 years, the seismic data was made available to the public by the board.   GSI commenced a legal action for copyright infringement against Encana and many other companies that were making use of the seismic data without GSI’s permission.  The Judge confirmed that GSI owned copyright in its seismic data, but held that to the extent that the regulatory regime of the CPRA conflicts with the Copyright Act, the CPRA regulatory regime prevails. The wording of the CPRA, properly interpreted, allows for disclosure without restriction after a defined period of time. It is a complete and specific code that applies to all oil and gas information in the offshore and frontier lands, including seismic data. Its provisions supplant any more general pieces of legislation, such as the Copyright Act.  Both of the foregoing decisions have been met with criticism.  The Maltz v. Witterick case is criticized as it allows a party to use intimate details of someone else’s life without compensation. The Geophysical services v. Encana et al case is criticized as amounting to expropriation by the government without compensation.  What do you think?  Please communicate your views to dthompson@tcllp.ca