computer & internet law: a year in review - mccarthy … · computer & internet law: a year...

Computer & Internet Law:A Year in Review

Barry B. SookmanMay 31, 2004

Toronto Computer Lawyers GroupMay 31, 2004, Toronto

3656208

2

Electronic Proof

3

Admissibility of Internet Information

“Overall, I am of the view that the use of the Internet at trial was beneficial and on several occasions, provided evidence which could not have otherwise been before the Court. For example, the Internet was used by counsel for WIC to confirm that the print copy of the meta tags (key information on a web site) was in conformity with the information found on ITV Technologies' web site. This would not have been possible without access to the Internet.” ITV Technologies Inc. v. WIC Television Ltd., 2003 FC 1056

4


“With regard to the reliability of the Internet, I accept that in general, official web sites, which are developed and maintained by the organization itself, will provide more reliable information than unofficial web sites, which contain information about the organization but which are maintained by private persons or businesses.” ITV Technologies Inc. v. WIC Television Ltd., 2003 FC 1056

5


“In my view, when considering the contents of a web site, the original is found on the Internet and provides better evidence than a print copy. The Court was able to see the documents as they existed on the Internet, and could witness such features as hyperlinking and interactive streaming that could not have been realistically reproduced on paper.” ITV Technologies Inc. v. WIC Television Ltd., 2003 FC 1056

6


“Given that web sites are continually changing and evolving, a web site which appears on the Internet today would not necessarily look the same as it did for example, in 1997. In order to look into the past, both parties relied on the web site www.archive.org, which contains a digital library of Internet web sites. By using the Way Back Machine, the parties were able to access the web sites as they had existed at the relevant time period. I am satisfied that this web site is reliable, and that the Court could rely on its digital library for an accurate representation of the web sites at the relevant time period.” ITV technologies Inc. v. Wic television Ltd., 2003 FC 1056

7

Admissibility of Computer Generated Evidence

See, State of Connecticut v Swinton (SC 16548, May 11, 2004) involving admissibility of computer enhanced photographs and computer generated exhibits.“We note…that the appearance of computer generated evidence in our courts is becoming more common. Not only can we not anticipate what forms this evidence will take, but also common sense dictates that the line between one type of computer generated evidence and another will not always be obvious.”

8


“…even the most advanced technologies today will seem commonplace tomorrow. Importantly, the factors we enunciate in this opinion provide for both circumstances. Moreover, we note that, because the domain of computer generated evidence expands on a nearly daily basis, by the time we could make a ruling regarding one particular program or application, that program would become obsolete and a new one would take its place. We do not wish to enunciate a standard that is applicable today and useless tomorrow.” State of Connecticut v Swinton(SC 16548, May 11, 2004)

9


“We agree that ‘‘[r]eliability must be the watchword’’ in determining the admissibility of computer generated evidence”…

Authentication “can generally be satisfied by evidence that (1) the computer equipment is accepted in the field as standard and competent and was in good working order, (2) qualified computer operators were employed, (3) proper procedures were followed in connection with the input and output of information, (4) a reliable software program was utilized, (5) the equipment was programmed and operated correctly, and (6) the exhibit is properly identified as the output in question.” State of Connecticut v Swinton (SC 16548, May 11, 2004)

10

Admissibility of Computer Enhanced Evidence

“Having viewed both tapes, I am satisfied the enhanced copy adds only brightness and a reference time scale. The brightness provides more detail, than in the original videotape, when viewing some events. I am further satisfied both videotapes are an accurate presentation of events as they occurred. I did not observe any indication of distortion, editing, tampering or any other factor which might impair the accuracy of either videotape…The original videotape on its own is sufficient. The [digitally] enhanced copy is of assistance in providing more detail. Both are admissible as "they accurately and fairly represent the information they purport to convey”. R. v. Jamiesonhttp://www.canlii.org/on/cas/onsc/2004/2004onsc11111.html Is the Canadian test adequate?

11

Getting the Evidence From Intermediaries-Norwich Orders

I read the Norwich and Glaxco Wellcome cases as establishing that the test for granting an equitable bill of discovery involves the following five criteria:

a) the applicant must establish a prima facie case against the unknown alleged wrongdoer;

b) the person from whom discovery is sought must be in some way involved in the matter under dispute, he must be more than an innocent bystander;

c) the person from whom discovery is sought must be the only practical source of information available to the applicants;

d) the person from whom discovery is sought must be reasonably compensated for his expenses arising out of compliance with the discovery order in addition to his legal costs;

e) the public interests in favour of disclosure must outweigh the legitimate piracy concerns. BMG Canada Inc. v. John Doe, 2004 FC 488

12

Getting the Evidence From Intermediaries-Privacy Issue

“However while the law protects an individual's right to privacy, privacy cannot be used to protect a person from the application of either civil or criminal liability. Accordingly, there is no limitation in PIPEDA restricting the ability of the Court to order production of documents related to their identity.” Section 7(3)(c)

BMG Canada Inc. v. John Doe, 2004 FC 488

13

Getting the Evidence From Intermediaries-Privacy Issue

“In this case, the plaintiffs have a legitimate copyright in their works and are entitled to protect it against infringement. However before making the order, the Court evidently must be satisfied that the information about to be disclosed is reliableand should restrict disclosure to the minimum required for the plaintiffs to identify an alleged defendant. Any order made should also, having in mind the privacy interests of the defendants, be accompanied by restrictions and confidentiality orders as the Court sees appropriate…. given the age of the data, its unreliability and the serious possibility of an innocent account holder being identified, this Court is of the view that the privacy concerns outweigh the public interest concerns in favour of disclosure.” BMG Canada Inc. v. John Doe, 2004 FC 488

14

Evidence to Prove On-line InfringementS80 creates exemption for making copies for (1) “private use”, (2) if copying is not done for a specified purpose e.g., selling, distributing, communicating to the public, public performance and (3) the copying is onto an audio-recording medium.

“No evidence was presented that the alleged infringers either distributed or authorized the reproduction of sound recordings. They merely placed personal copies into their shared directorieswhich were accessible by other computer user via a P2P service.” BMG Canada Inc. v. John Doe, 2004 FC 488

Did the court properly construe the exemption?

Is a “making available” right necessary?

15

Evidence to Prove On-line Infringement

“The evidence that we have summarized does not exclude the possibility of substantial noninfringinguses of the Aimster system, but the evidence is sufficient, especially in a preliminary-injunction proceeding, which is summary in character, to shift the burden of production to Aimster to demonstrate that its service has substantial noninfringing uses.” In Re:Aimster Copyright Litigation 67 U.S.P.Q.2d 1233 (7th.Cir.2003)

16

Evidence to Prove On-line Infringement“The general rule is that the defendant's intention is irrelevant to a finding of infringement. The issue is ‘what the defendant does, not ... what he intends’”…

“The onus of proving infringement would become impractical and unduly burdensome in cases of possession were the patent holder required to demonstrate the defendant's intention to infringe. As Professor Vaverexplains, "mere possession may not be use, but a business that possesses a patented product for trade may be presumed either to have used it or to intend to use it, unless it shows the contrary. “Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34

17

What is a “document”?“The plaintiffs have also brought this motion under Rule 233, however this Rule presupposes the existence of specified documents. The definition of a document contained in Rule 222, in my view, is not broad enough to cover the creation of documents not normally held by a party nor retrievable through computer systems used by a party in its ordinary business. In this case, documents do not pre-exist which link an IP address to the customer of an ISP. Documents would, of course, be generated should an ISP be compelled to make this connection; however, this is not something contemplated by Rule 233. In short, the purposeof Rule 233 is to compel the disclosure, but not the very creation of documents.” BMG Canada Inc. v. John Doe, 2004 FC 488.

Would the case have been different if the information was on paper in two different file cabinets?

18

What is a “document”?Contrast BMG case with Sony Music Entertainment (Australia) Limited v University of Tasmania [2003] FCA 532 (30 May 2003)

“There is authority that electronic records and computer databases are documents…

The records do not cease to "relate" because they may also contain a great amount of irrelevant material. The problem is toextract with some precision the relevant material by the use of appropriate search criteria and tools…”

Court ordered disclosure of entire set of preserved records to permit applicant’s expert to run search program to extract relevant data.

19

Getting the Evidence– Anton Piller Orders

“it is obviously an essential part of the applicants’ case to put evidence before the Court about the dynamic operation of the Kazaa system, as distinct from its structure. Evidence about dynamic operation is available on relevant computers, from moment to moment, as the transactions occur. If that evidence is to be available at the trial, there must be ‘snapshots’, perhaps many snapshots, showing the changing data in the system from moment to moment. The scheme of the Anton Piller orders was to allow those snapshots to be taken, and thereby to preserve that changing data. Analysis of the data will no doubt add to the experts’ understanding of the operation of the Kazaa system, but that does not mean that the exercise permitted by the Anton Piller orders was an investigation. It was an exercise designed to preserve evidence. The situation seems unusual because it involves preserving data momentarily held in computer memory, rather than data recorded in a more permanent medium such as writing on paper. It is preservation nonetheless.” Universal Music Australia Pty Ltd v SharmanLicense Holdings Ltd [2004] FCA 183 (4 March 2004)

20

Who Pays for Electronic Discovery?

“… the reliance on broad discovery has hit a roadblock. As individuals and corporations increasingly do business electronically - using computers to create and store documents, make deals, and exchange e-mails--the universe of discoverable material has expanded exponentially. The more information there is to discover, the more expensive it is to discover all the relevant information until, in the end, ‘discovery is not just about uncovering the truth, but also about how much of the truth the parties can afford to disinter.’” Zubulake v. UBS Warburg LLC, 2003 U.S. Dist. LEXIS 7939 (S.D.N.Y. May 13, 2003).

21

Who Pays for Electronic Discovery?Disputes regarding the scope and cost of discovery of electronic data requires a three-step analysis:

“First, it is necessary to thoroughly understand the responding party'scomputer system, both with respect to active and stored data. For data that is kept in an accessible format, the usual rules of discovery apply: the responding party should pay the costs of producing responsive data. A court should consider cost-shifting only when electronic data is relatively inaccessible, such as in backup tapes.”

Second, because the cost-shifting analysis is so fact-intensive, it is necessary to determine what data may be found on the inaccessible media. Requiring the responding party to restore and produce responsive documents from a small sample of the requested backuptapes is a sensible approach in most cases.”

22

Who Pays for Electronic Discovery?Third, and finally, in conducting the cost-shifting analysis, the following factors should be considered, weighted more-or-less in the following order: 1. The extent to which the request is specifically tailored to discover relevant information; 2. The availability of such information from other sources; 3. The total cost of production, compared to the amount in controversy; 4. The total cost of production, compared to the resources available to each party; 5. The relative ability of each party to control costs and its incentive to do so; 6. The importance of the issues at stake in the litigation; and 7. The relative benefits to the parties of obtaining the information. Zubulake v. UBS Warburg LLC, 2003 U.S. Dist. LEXIS 7939 (S.D.N.Y. May 13, 2003).

23

PIPEDA-Secure Electronic Signature Regulations

Part 2 of PIPEDA provides a framework by which federal statutes and regulations may be adjusted to accommodate electronic alternatives to paper-based means of communication.

Some types of electronic documents, such as sworn statements, statements declaring truth, witnessed documents, originals, and sealed documents, requires a secure electronic signature.

Subsection 31(1) defines secure electronic signature as an electronic signature that results from the application of a technology or a process prescribed by regulations made under subsection 48(1).

24

PIPEDA-Secure Electronic Signature Regulations

Recognizes "secure electronic signature" as a digital signature that is issued by a reliable Certification Authority accredited by Treasury Board.

When such an electronic signature has been used there is a rebuttable presumption that the electronic document is attributable to the person who is identified in, or can be identified through, the digital signature certificate.

25

Electronic AuthenticationThe Canadian government has introduced new electronic authentication principles.

The Principles identify the functions and responsibilities of participants in authentication processes and provide a framework to assess and manage the risks that accompany these responsibilities.

The Principles also identify essential elements of security, privacy, disclosure and complaint handling that need to be taken into account at each stage of the design, development, implementation and assessment of an authentication service. See, http://e-com.ic.gc.ca/epic/internet/inecic-ceac.nsf/en/h_gv00240e.html

26

Jurisdiction and the Internet

27

Conceptual Principles-Private International Law Objectives

Private international law objectives apply to guide the determination of the principal private international law issues.

The Supreme Court has repeatedly stressed the importance of order, comity, certainty, predictability, economic efficiency, escaping the spectre that a multiplicity of jurisdictions may become capable of exercising jurisdiction, preventing forum shopping, and fairness.

See, Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450, Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, Tolofson v. Jensen, [1994] 3 S.C.R. 1022, Hunt v. T & N PLC, [1993] 4 S.C.R. 289, Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC No. 51, Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), [2001] 3 S.C.R. 907

28

Real and Substantial Connection-Personal Jurisdiction

“Modern ideas of order and fairness require that a court must have reasonable grounds for assuming jurisdiction where the participants to the litigation are connected to multiple jurisdictions.” Beals v. Saldanha, 2003 SCC 72.

Jurisdiction can be assumed if there is a real and substantial connection between:

(1) the defendant and the forum province of a kind which makes it reasonable to infer that he or she had voluntarily submitted himself or herself to the risk of litigation in its courts (general jurisdiction), or

(2) the adjudicating forum and the subject matter of the action (specific jurisdiction). Beal v. Saldanha, 2003 SCC 72.

29

R&S Connection and Defamation

“[t]he dissemination of defamatory statements over the Internet could give jurisdiction to the court where damage is sustained by the plaintiff no matter where publication has taken place, especially if the defamatory material was targeted at the forum province. This constitutes a real and substantial connection with the forum and is an application of the effects principle.” Bangoura v. Washington Post2004 CarswellOnt 340 (Ont. Sup. Ct.)

30

Web Site and General Jurisdiction“To subject a nonresident corporate defendant, such as Costco, tosuit in Louisiana solely on the basis of a minuscule number of e-commerce sales that are unrelated to the cause of the plaintiff's alleged injury would, we think, render established jurisdictional boundaries meaningless. Furthermore, other organizations that operate websites accessible to online purchasers would be deprived of the ability to predict with any certainty where they would besubject to suit. Accordingly, we agree with the district court that the exercise of personal jurisdiction over Costco in this case would be inconsistent with traditional fairness considerations. We thus affirm the district court's dismissal of HHI's suit against Costco for lack of personal jurisdiction.” Hockerson-Halberstadt, Inc. v. Propet USA, Inc. 62 Fed.Appx. 322 (Fed.Cir.2003).

31

Web Site and General Jurisdiction“…L.L. Bean ‘targets’ its electronic advertising at California and maintains a highly interactive, as opposed to ‘passive,’ website from which very large numbers of California consumers regularly make purchases and interact with L.L Bean…Bean’s contacts are part of a consistent, ongoing, and sophisticated sales effort that has included California for a number of years…

Recognizing that an online store can operate as the functional equivalent of a physical store, the test does not require an actual presence in the state. Rather, the nature of the commercial activity must be of a substantial enough nature that it ‘approximate[s] physical presence’.” Gator.com Corp. v. L.L. Bean, Inc., 341 F.3d 1072 (9th Cir.2003).

32

Website and Specific Jurisdiction

“As Zippo and the Courts of Appeals decisions indicate, the mere operation of a commercially interactive web site should not subject the operator to jurisdiction anywhere in the world. Rather, there must be evidence that the defendant "purposefully availed" itself of conducting activity in the forum state, by directly targeting its web site to the state, knowingly interacting with residents of the forum state via its web site, or through sufficient other related contacts.” Toys “R” US, Inc. v Step two, S.A. 65 USPQ2d 1628 (3rd Cir. 2003).

33

“I am reluctant to fall in line with these courts for two reasons. First, it is not clear why a website's level of interactivity should be determinative on the issue of personal jurisdiction. As even courts adopting the Zippo test have recognized, a court cannot determine whether personal jurisdiction is appropriate simply by deciding whether a website is ‘passive’ or"interactive" (assuming that websites can be readily classified into one category or the other). Even a ‘passive’ website may support a finding of jurisdiction if the defendant used its website intentionally to harm the plaintiff in the forum state…. Similarly, an ‘interactive’ or commercial website may not be sufficient to support jurisdiction if it is not aimed at residents in the forum state. … Moreover, regardless how interactive a website is, it cannot form the basis for personal jurisdiction unless a nexus exists between the website and the cause of action or unless the contacts through the website are so substantial that they may be considered ‘systematic and continuous’ for the purpose of general jurisdiction. Thus, a rigid adherence to the Zippo test is likely to lead to erroneous results.” HyCite Corporation v Badbusinessbureau.com, L.L.C. (W.D.Wis.,2004)

Website and Specific Jurisdiction

34

On-Line Contract Issues

35

Enforceability of on-line Contracts“We recognize that contract offers on the Internet often require the offeree to click on an “I agree” icon. And no doubt, in many circumstances, such a statement of agreement by the offeree is essential to the formation of a contract. But not in all circumstances. While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract. It is standard contract doctrine that when a benefit is offered subject to stated conditions, and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutesan acceptance of the terms, which accordingly become binding on the offeree.” Register.com, Inc. v Verio, Inc. (2nd. Cir. Jan 23, 2004)

36

Enforceability of on-line Contracts“Returning to the apple stand, the visitor, who sees apples offered for 50 cents apiece and takes an apple, owes 50 cents, regardless whether he did or did not say, “I agree.” The choice offered in such circumstances is to take the apple on the known terms of the offer or not to take the apple. As we see it, the defendant in Ticketmaster and Verio in this case had a similar choice. Each was offered access to information subject to terms of which they were well aware. Their choice was either to acceptthe offer of contract, taking the information subject to the terms of the offer, or, if the terms were not acceptable, to decline to take the benefits.” Register.com, Inc. v Verio, Inc. (2nd. Cir. Jan 23, 2004)

37

Enforceability of on-line ContractsSee also, Canadian Real Estate Association v. Sutton (Quebec) Real Estate Services Inc. Montreal, 500-0-074815-026, 10 April 2003, Que. S.C.

The Court granted an injunction against the respondent, ordering it to cease downloading listings from the applicant’s website for the purpose of reposting the information to its own website.

The court held that the respondent’s actions violated the terms of use agreement posted on the applicant’s website.

In granting the injunction court was influenced by the fact thatthe respondent was aware of the applicable terms of use and, in fact, had its own webwrap terms of use posted on its website.

38

Contracts-Forum Selection

“Forum selection clauses are common components of international commercial transactions…, They have, in short, ‘been applied for ages in the industry and by the courts’: These clauses are generally to be encouraged by the courts as they create certainty and security in transaction, derivatives of order and fairness, which are critical components of private international law...”

Strong cause is required for a court nor to enforce a forum selection clause. Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, Lévy & Associés Inc. v. AzcoMining Inc., [2001] 3 S.C.R. 978

39

Consumer Protection

Canadian Code of Practice for Consumer Protection in Electronic Commerce, January, 2004.

Endorsed by Working Group on Electronic Commerce as well as Federal, Provincial and Territorial Ministers responsible for consumer affairs.

Addresses: information provision; language, contract formation and fulfilment, online privacy, security of payment, complaint handing, SPAM, and communication with children.

40

Enforcement of Disclaimers in Fundamental Breach Cases

Courts have refused to enforce exclusion clauses where to do so would perpetuate an injustice and produce an unfair result.

Courts have retained the residual power of not enforcing limitations or exclusions of liability in favour of parties on policy grounds such as where the party seeking to enforce the clause has totally repudiated its obligations under the contract.

In Shelanu Inc.v v Print Three Franchising Corp. (2003) 64 O.R. (3d) 533 (C.A.) the Ontario Court of Appeal stated:

“legal values such as fairness, equity and justice underlie contractual interpretation and enforcement. Before the court allows the coercive power of the state to be used to serve the private interests of a party to a contract, the court will want to ensure that the contract does not offend these legal values.”

41

Free and Open Source Software Licenses

42

Most Common LicensesGNU General Public License (GPL)

GNU Library or Lesser General Public License (LGPL)

Others include: BSD License, Artistic License, MIT License, Mozilla Public License (MPL), Apache Software License

SCO v IBM, Daimler Chrysler.

GPL was enforced in Germany in netfilers/iptables v sitecom. See also, Progress Software Corp v MySQLAB 2002 U.S. Dist. LEXIS 5757.

43

”Free” “Copylefted” ModelCopylefted software is a term promoted by the FSF.

It is free software whose distribution terms do not let redistributors add any additional restrictions when they redistribute or modify thesoftware.

This means that every copy of the software, even if it has been modified, must be “free” software. The Free Software Definition, Free Software Foundation www.gnu.org

The impact is “viral”; one of inheritance as the terms potentially impact all code that is distributed together.

Failure to comply with license restrictions can have significantconsequences.Users need to be diligent about what is used.

44

Liability for Keying, Pop Up Ads and SPAM

45

What is Keying?

“Keying allows advertisers to target individuals with certain interests by linking advertisements to pre-identified terms. To take an innocuous example, a person who searches for a term related to gardening may be a likely customer for a company selling seeds. Thus, a seed company might pay to have its advertisement displayed when searchers enter terms related to gardening. After paying a fee to defendants, that company could have its advertisements appear on the page listing the search results for gardening-related terms: the ad would be “keyed” to gardening-related terms.” Playboy Enterprises, Inc. v Netscape Communications Corp. (9th.Cir. Jan. 14, 2004)

46

Liability for Keying and Pop Up Ads

Might be liability for trade-mark infringement or dilution. Playboy Enterprises, Inc. v Netscape Communications Corp. (9th.Cir. Jan. 14, 2004); 1-800 Contacts, Inc v WHENU.COM 69 U.S.P.Q.2d 1337 (S.D.N.Y. 2003)

No liability Wells Fargo & Co. v WHENU.COM, Inc, 69 U.S.P.Q.2d 1171 (E.D.Mich.2003); Reed Executive plc v Reed Business Information Ltd. [2004] EWCA Civ 159 (Eng.CA)

47

Controlling SPAMAn Anti-Spam Action Plan for Canada, Industry Canada, May 2004

Industry Canada formulated a six-point action plan, calling for specific initiatives by government and the private sector, including:

- using existing laws, such PIPEDA and Competition Act

- launching a review of existing laws to identify any regulatory or legislative gaps;

- improving network management practices and industry codes of practice;

- using technology to validate legitimate commercial communications;

- enhancing consumer education and awareness; and - promoting an international framework to fight spam.

U.S. See, Controlling the Assault of Non- Solicited Pornography and Marketing Act of 2003 (CAN-SPAM ACT 2003).

48

Copyright

49

Copyright Reform

Report of the Standing Committee on Canadian Heritage, May 2004. Recommendations include:

Ratification of the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT)

Will create “making available” right and will likely amend private copying exemption.

50

Copyright Reform-ISP LiabilityISPs can be subject to liability for copyrighted material on their facilities.

ISPs should be exempt from liability if they act as true “intermediaries,” without actual or constructive knowledge of the transmitted content, and where they meet certain prescribed conditions.

ISPs should be required to comply with a “notice and takedown” scheme that is compliant with the Canadian Charter of Rights and Freedoms, and with additional prescribed procedures to address other infringements.

51

Conexsys Systems Inc. c. Aime Star Marketing Inc., (2003-09-02) QCCS 500-05-038806-988.

Court followed the decision in the Delrina case and found that computer screen displays as well as other non-literal aspects of a computer program were protected by copyright. The court found there to be infringement even though the defendant did not have any access to the source codes to the plaintiff’s program.

Protection for Screen Displays and Non-Literal Expression

52

Trespass to Chattels to Protect Data

“The district court found that Verio’s use of search robots, consisting of software programs performing multiple automated successive queries, consumed a significant portion of the capacity of Register’s computer systems. While Verio’s robots alone would not incapacitate Register’s systems, the court found that if Verio were permitted to continue to access Register’s computers through such robots, it was “highly probable” that other Internet service providers would devise similar programs to access Register’s data, and that the system would be overtaxed.” Register.com, Inc. v Verio, Inc. (2nd. Cir. Jan 23, 2004)

53

Private Copying Exemption

“The Board realizes that Parliament could not have imagined recent technological developments when this regime was enacted.”

“Evidence in these proceedings suggests that the Internet is now a dominant source of private copies, accounting for slightly half of all copies made”.

Private Copying 2003-2004: Copying for Private Use Copyright Board December 12, 2003

54

CCH v Law Society Case

55

Purpose of Copyright“Binnie J. recently explained in Théberge, supra, at paras. 30-31, that the Copyright Act has dual objectives:

The Copyright Act is usually presented as a balance between promoting the public interest in the encouragement and dissemination of works of the arts and intellect and obtaining a just reward for the creator . . .

The proper balance among these and other public policy objectives lies not only in recognizing the creator's rights but in giving due weight to their limited nature.

In interpreting the Copyright Act, courts should strive to maintain an appropriate balance between these two goals.” Par 10.

56

Originality RequirementThe work originates from an author and is not copied from another work.

The work must be the product of an author's exercise of skill and judgment.

The exercise of skill and judgment must not be so trivial that it could be characterized as a purely mechanical exercise.

“Sweat of the brow” or “industriousness” is not enough.

“Creativity” is not required to make a work "original".

Copyright does not extend to facts.

57

Skill and Judgment Requirement

“By skill, I mean the use of one's knowledge, developed aptitude or practiced ability in producing the work. By judgment, I mean the use of one's capacity for discernment or ability to form an opinion or evaluation by comparing different possible options in producing the work. This exercise of skill and judgment will necessarily involve intellectual effort. The exercise of skill and judgment required to produce the work must not be so trivial that it could be characterized as a purely mechanical exercise”. par. 16

58

Skill and Judgment Requirement

Court introduced a completely new test for originality.

Previous Anglo-Canadian cases had recognized that more than trivial amounts of either labour (including sweat of the brow or industriousness), skill or judgment were enough (except for Tele-Direct).

Previous Anglo-Canadian cases had protected facts in a compilation.

No case had defined meaning of “skill and judgment”.

59

Is it a workable Standard?Court protected all works in issue including headnotes, case summary, topical index.

Court’s example of “trivial” “changing a font in a work” minor mechanical editing is consistent with previous cases.

Will require evidence of “skill” and “judgment”.

Eliminates protection for “whole universe” compilations and databases.

Protection for computer created compilations and databases in doubt.

Protection will be limited to selection or arrangement produced by skill and judgment.

Risk that “facts” will not be protected even as part of original selection.

Weakens protection against extraction of data from databases where “originality” is in the arrangement of data.

Will alter test for copyright infringement away from “appropriation of labour” or “unfair copying” tests.

60

Authorization"Authorize" means to "sanction, approve and countenance“.

Countenance “must be understood in its strongest dictionary meaning, namely, "give approval to, sanction, permit, favour, encourage“.

Authorization can be inferred from acts that are less than direct and positive, including a sufficient degree of indifference.

A person does not authorize infringement by authorizing the mere use of equipment that could be used to infringe copyright.

Courts should presume that a person who authorizes an activity does so only so far as it is in accordance with the law. This presumption may be rebutted if it is shown that a certain relationship or degree of control existed between the alleged authorizer and the persons who committed the copyright infringement.

61

AuthorizationCourt rejected Moorehouse decision which held that there can be infringement if a person:

(1) has under his control the means by which an infringement of copyright may be committed “such as a photocopying machine;”

(2) makes it available to other persons, knowing, or having reason to suspect, that it is likely to be used for the purpose of committing an infringement; and

(3) omits to take reasonable steps to limit its use to legitimate purposes.

Moorhouse was rejected because it “shifts the balance in copyright too far in favour of the owner's rights and unnecessarily interferes with the proper use of copyrighted works for the good of society as a whole”. par 41.

62

Implications of Authorization Holding

Owners who control means of reproduction are not required to control copying by others.

Will be important in future copying cases and for intermediate liability in other cases e.g. ISP liability.

Test was applied in the BMG case to find that Kazzausers did not authorize copying from their shared directories.

Can the BMG decision be reconciled with the Copyright Board decision in the Tariff 22 case which held that person who uploads file onto a web server authorizes a communication to the public?

63

User Rights“…the fair dealing exception is perhaps more properly understood as an integral part of the Copyright Act than simply a defence. Any act falling within the fair dealing exception will not be an infringement of copyright. The fair dealing exception, like other exceptions in the Copyright Act, is a user's right. In order to maintain the proper balance between the rights of a copyright owner and users' interests, it must not be interpreted restrictively. As Professor Vaver, supra, has explained, at p. 171: ‘User rights are not just loopholes. Both owner rights and user rights shouldtherefore be given the fair and balanced reading that befits remedial legislation.’” par. 48

Is a “user’s right” an “exemption”, an “interest” or a “right” that can be used against others? What are the consequences of each view?

64

Meaning of Research"Research" must be given a large and liberal interpretation in order to ensure that users' rights are not unduly constrained…research is not limited to non-commercial or private contexts.” par 51

Court did not refer to other decisions which define research as “a diligent and systematic enquiry or investigation into a subject in order to discover facts or principles” or “searching into a subject or matter or the investigation or close study of it”. See, Newsmonitor at p. 463; DeGaris at p. 629.

Implications for reverse engineering of software.

65

Who Can Claim the Fair Dealing Exemption?

Prior cases had restricted the benefit to the copier e.g., the purpose of the copying was for the copier’s own research purpose.

FCA had held “if a patron of the Great Library could make for him or herself a copy of the Publishers' works as fair dealing for an allowable purpose, the Law Society does not infringe copyright if it makes the copy on behalf of a requester. Whether the Law Society shares the purpose of its patrons, or claims the statutory exemption in subsection 30.2(1), the result is the same.”

66

Who Can Claim the Fair Dealing Exemption?

"Dealing" connotes not individual acts, but a practice or system... Persons or institutions relying on the s. 29 fair dealing exception need only prove that their own dealings with copyrighted works were for the purpose of research or private study and were fair. They may do this either by showing that their own practices and policies were research-based and fair, or by showing that all individual dealings with the materials were in fact research-based and fair.” par. 63

Can reverse engineering be contracted out?

67

Framework for Determining Fairness

The Court accepted the following non-exclusive factors:

(1) the purpose of the dealing;

(2) the character of the dealing;

(3) the amount of the dealing;

(4) alternatives to the dealing;

(5) the nature of the work; and

(6) the effect of the dealing on the work. par. 53

68

Observations Regarding FairnessResearch done for commercial purposes may not be as fair as research done for charitable purposes.

If multiple copies of works are being widely distributed, this will tend to be unfair.

The amount of the work copied is an important factor in assessing the fairness of a dealing.

The alternatives to copying can effect the determination of fairness.

The effect of the copying is an important factor. If a copy is made to compete in the market for the original work, or for a rival purpose, this suggests that the dealing is not fair.

The availability of a licence from a collective society is not relevant to deciding whether a dealing has been fair

69

Are the Law Society's fax transmissions communications to the public?

“The fax transmission of a single copy to a single individual is not a communication to the public. This said, a series of repeated fax transmissions of the same work to numerous different recipients might constitute communication to the public in infringement of copyright.” par. 78

Decision supports argument that non-simultaneous communications can be infringement e.g. unauthorized on-demand, or web site posting will be infringing.

70

Importance of Case

Settles standard of originality for all works including compilations to require more than trivial “skill and judgment” leaving most works protected.

Owners who control means of reproduction are not required to control copying by others.

Case enshrines importance of “users’ rights”. Commercial research can be a “fair dealing”.

Fair dealing exemption will be given a “balanced” reading.

Criteria for fairness will be applied in subsequent cases

Computer & Internet Law:A Year in Review

Barry B. SookmanMay 31, 2004

Toronto Computer Lawyers GroupMay 31, 2004, Toronto

3656208