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.

Video Games And Circumvention of Technological Protection Measures

In late 2012, the Canadian Copyright Act was amended to prohibit the circumvention of technological protection measures (TPMs – e.g. digital locks). ,  The relevant section of the Act reads:
Definitions
41 The following definitions apply in this section and in sections 41.1 to 41.21.
circumvent means,
• (a) in respect of a technological protection measure within the meaning of paragraph (a) of the definition technological protection measure, to descramble a scrambled work or decrypt an encrypted work or to otherwise avoid, bypass, remove, deactivate or impair the technological protection measure, unless it is done with the authority of the copyright owner; and
• (b) in respect of a technological protection measure within the meaning of paragraph (b) of the definition technological protection measure, to avoid, bypass, remove, deactivate or impair the technological protection measure. (contourner)
technological protection measure means any effective technology, device or component that, in the ordinary course of its operation,
• (a) controls access to a work, to a performer’s performance fixed in a sound recording or to a sound recording and whose use is authorized by the copyright owner; or
• (b) restricts the doing — with respect to a work, to a performer’s performance fixed in a sound recording or to a sound recording — of any act referred to in section 3, 15 or 18 and any act for which remuneration is payable under section 19. (mesure technique de protection)
Prohibition
• 41.1 (1) No person shall
(a) circumvent a technological protection measure within the meaning of paragraph (a) of the definition technological protection measure in section 41;
(b) offer services to the public or provide services if
 (i) the services are offered or provided primarily for the purposes of circumventing a technological protection measure,
 (ii) the uses or purposes of those services are not commercially significant other than when they are offered or provided for the purposes of circumventing a technological protection measure, or
 (iii) the person markets those services as being for the purposes of circumventing a technological protection measure or acts in concert with another person in order to market those services as being for those purposes; or
(c) manufacture, import, distribute, offer for sale or rental or provide — including by selling or renting — any technology, device or component if
 (i) the technology, device or component is designed or produced primarily for the purposes of circumventing a technological protection measure,
 (ii) the uses or purposes of the technology, device or component are not commercially significant other than when it is used for the purposes of circumventing a technological protection measure, or
 (iii) the person markets the technology, device or component as being for the purposes of circumventing a technological protection measure or acts in concert with another person in order to market the technology, device or component as being for those purposes.

The Copyright Act sets out various exceptions that permit reproduction of works subject to copyright.  However, even the various exceptions that allow reproduction do not permit circumvention to make such reproduction.  A reproduction will only be permitted under the various exceptions if the person making the reproduction:
“in order to make the reproduction, did not circumvent, as defined in section 41, a technological protection measure, as defined in that section, or cause one to be circumvented”
The first court decision considering the circumvention of TPMs is Nintendo of America Inc v King et al.,  (Go Cyber Shopping (2005) Ltd) a decision of the Federal Court of Canada, which issued in March 2017
Nintendo’s game consoles and game cartridges contain technological protection measures (TPM)  which are intended to prevent persons from using their game consoles with unauthorized copies of Nintendo game cartridges.   Go Cyber Shopping (2005) Ltd sold “game copiers” that would mimic the function of Nintendo game cartridges so that they could be used on Nintendo’s game consoles.  Go Cyber Shopping (2005) Ltd. sold “mod chips” that would enable the user to disable the TPM in order to use pirated game cartridges.
A first issue considered by the Federal Court was whether the Nintendo protection should be considered a TPM as contemplated by the Act. The court found that it was.

A second issue considered by the Court was whether Go Cyber Shopping (2005) Ltd could claim protection under the exception that allows modifications for the purpose of compatibility, which reads:
Permitted acts
30.6 It is not an infringement of copyright in a computer program for a person who owns a copy of the computer program that is authorized by the owner of the copyright, or has a licence to use a copy of the computer program, to
• (a) reproduce the copy by adapting, modifying or converting it, or translating it into another computer language, if the person proves that the reproduced copy
(i) is essential for the compatibility of the computer program with a particular computer,
(ii) is solely for the person’s own use, and
(iii) was destroyed immediately after the person ceased to be the owner of the copy of the computer program or to have a licence to use it

The Federal Court found that the exception did not apply to these facts.

A third issue considered by the Court was, while Go Cyber Shopping (2005) Ltd was facilitating copying, they were not actually infringing copyright themselves. Members of the public that used the Go Cyber Shopping (2005) Ltd circumvention technologies were the actual infringers.  Upon a reading of the section, the Court found that Go Cyber Shopping (2005) Ltd did not have to actually infringe copyright to be caught by section as “the uses or purposes of the technology, device or component are not commercially significant other than when it is used for the purposes of circumventing a technological protection measure”.

Nintendo sought statutory damages.  Section 38.1 of the Copyright Act, which allows a Court to award statutory damages reads:
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;

A fourth issue was how to apply the statutory damages calculation. The Court determined that it would base a statutory damages award upon the number of “works” (games) that Go Cyber Shopping (2005) Ltd technology made illegally accessible.  Citing a need for deterrence the Court awarded the maximum amount of $20,000.00 per work (game).   The Go Cyber Shopping (2005) Ltd technology allowed access to 585 of Nintendo’s catalog of games.  The award, therefore, amounted to $20,000.00 x 585 for a total of $11,700,000.00.

In addition, Nintendo sought punitive damages to punish Go Cyber Shopping and further deter other would be infringers. The Court considered the disregard for Nintendo’s rights and the length of time Go Cyber Shopping had continued their activities and awarded a further $1,000,000 in punitive damages.

In summary, the award in the Nintendo Case totalling 12,700,000.00 should deter potential infringers and encourage game developers to include technological protection measures in their products.

Patent agents are not stifling Canadian inventors

We are indebted to Robert Barrigar for permitting us to post this article that was published in the Globe and Mail on March 8, 2017.  Mr. Barrigar is past-president of the Intellectual Property Institute of Canada (IPIC) and was registered as a Canadian and U.S. patent agent and served four years on the Patent Agents Examining Board.

Innovation is a hot topic these days, but often not fully understood. The role of patent agents is one of the most misunderstood subtopics, and a recent argument in these pages (of the Globe and Mail) that patent agents are impeding innovation in Canada only served to cloud the waters. While the author recommended government action to redefine the regulation of Canadian patent agents, he failed to recognize that the Intellectual Property Institute of Canada (IPIC) had previously, on its own initiative, recommended such to the federal government. Canadian patent agents obtain protection for the inventions of Canadian clients; they do not present obstacles, except charging for their services.

It is important to understand the difficulties faced by Canadian innovators. Our market is small compared to that of the United States. For this reason, it is often more difficult for a Canadian innovator to receive financing for obtaining and exploiting a patent than is the case in the United States. Canadian innovators typically prefer to obtain U.S. patents as a first priority, and Canadian patents, at best, a second priority. Accordingly, a Canadian patent agent has to understand the requirements of U.S. patent law and practice, as a Canadian agent will often be charged by a Canadian client with writing and prosecuting a U.S. patent application. The principal challenges to Canadian innovators – financing, marketing, competition – do not involve Canadian patent agents.

A typical Canadian patent agent has a university degree in science or engineering, and an aptitude for effective communication about technical matters relating to clients’ inventions. Historically, the Canadian patent profession has been governed primarily by the Patent Act and Patent Rules, and secondarily by IPIC. At the present time, this set of relationships is under review both by IPIC and the federal government.

The patent profession is sufficiently small that no specific patent-agent-oriented university accreditation is available for individuals who plan to become professional patent agents – they must rely upon their work experience to qualify for writing the patent agents examinations, which they must pass in order to become registered. They need not have been apprenticed to a registered patent agent, but having had such as a mentor and tutor is clearly advantageous.

The members of the Examining Board who set and mark the examinations that must be passed for registration as a Canadian patent agent are appointed by the Commissioner of Patents. The chairperson of the Board and at least three other members must be professional employees of the Patent Office.

When I served on the Examining Board, the pass rate was appreciably below 50 per cent, partly due to the writing of the examinations by lawyers of limited experience; inadequate technical analysis; lack of familiarity with applicable statutory and case law and regulations; and inadequacy of written expression. It is clearly not in the public interest to accept as members of the patent profession those who cannot pass the patent agents examinations. Canada does not need consultants who fail to comprehend the complexities of patent practice nor those who draft inadequate documents. Perhaps the most underrated desirable qualification for a patent agent is adequacy of expression. Unfortunately, not even a PhD nor a law degree guarantees that this quality is among those obtained through an individual’s education. This reflects a deficiency in Canadian education at lower levels.

It is important to note that inventors may represent themselves before the Patent Office; they do not need to retain a patent agent. But they would be well advised to do so, as serious and sometimes irreversible errors can easily be made by untutored inventors. Chances are that any consultant who attempts to draft a patent application without having been registered as a patent agent will be at risk of drafting a legally invalid or economically useless or inferior document. And any such consultant who attempts to respond to a Patent Office Examiner’s objection will face the same set of problems.

It is important to note that patent agents are not, per se, advocates for clients’ inventions. Clients may wish to obtain and enforce their own patents, but they may wish to invalidate others’ patents or obtain opinions so that they do not infringe such. Subject to avoidance of conflicts of interest, patent agents must be prepared to assist clients to obtain any of these objectives.

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.