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Intellectual and Industrial Property: SummaryProf. Gold

Winter 2008Dorian Needham

TABLE OF CONTENTS

1. Introduction.......................................................................................................................................................................................... 3a. Intellectual and Industrial Property Generally................................................................................................................................3b. Introductory Case Studies..............................................................................................................................................................3

Fauchart and von Hippel: “Norms-Based Intellectual Property Systems: The Case of French Chefs”3Loshin, “Secrets Revealed: How Magicians Protect Intellectual Property Without Law”.....................5

2. Modalities of ordering IP space.............................................................................................................................................................7a. Trademarks....................................................................................................................................................................................7

Institut national des appellations d’origine des vins & eaux-de-vie v. Andres Wines Ltd., 60 O.R. (2d) 316 (HCJ).......................................................................................................................................8

Linoleum Manufacturing Company v. Nairn, [1876] Ch. 834......................................................................9Reckitt & Colman Ltd. V. Borden Inc., [1990] 1 W.L.R. 491 (HL).............................................................10Institut national des appellations d’origine des vins & eaux-de-vie v. Andres Wines Ltd., 60 O.R.

(2d) 316 (HCJ).....................................................................................................................................11Reckitt & Colman Ltd. V. Borden Inc., [1990] 1 W.L.R. 491 (HL).............................................................13Eli Lilly & Co. v. Novopharm Ltd., 147 D.L.R. (4th) 673 (FC-TD)..............................................................13Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824....................14Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772................................................15Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824....................16Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65...........................................................................................17Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37............................................................................17Michelin – Michelin & Cie v. CAW, [1997] 2 F.C. 306 (TD).........................................................................19British Columbia Automobile Assn. v. O.P.E.I.U., Local 378, 2001 BCSC 156........................................20

b. Copyright.....................................................................................................................................................................................20University of London Press, Ltd. v. University Tutorial Press, Ltd. (1916), 2 Ch. 601.........................23Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340 (1991)..............................24CCH Canadian Ltd. V. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339.....................24Nichols v. Universal Pictures Corporation, 45 F.2d 119 (1930)...............................................................25Gilliam v. American Broadcasting Companies, 538 F.2d 14 (1976).........................................................25Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. U.S., 125 S.Ct. 2764 2005..................................26Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336........................27Gilliam v. American Broadcasting Companies, 538 F.2d 14 (1976).........................................................29Eldred v. Ashcroft, 123 S.Ct. 769 (2003) (US SC).......................................................................................29CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339.....................30Rogers v. Koons, 960 F.2d 301 (1992).........................................................................................................31Computer Associates International v. Altai, C.A. 2 (N.Y.), 1992..............................................................32FILM SCREENING: Brett’s documentary.......................................................................................................34

c. Trade Secrets...............................................................................................................................................................................35d. Patents........................................................................................................................................................................................ 35

Schlumberger Ltd. v. Canada (Patent Commissioner), [1982] 1 F.C. 845 (CA).....................................37Tennessee Eastman v. Canada (Commissioner of Patents), [1974] S.C.R. 111.....................................37Diamond v. Chakrabarty, 447 U.S. 303 (1980)............................................................................................37Diamond v. Diehr, 450 U.S. 175 (1984)........................................................................................................38Harvard College v. Canada (Commissioner of Patents), 2002 SCC 76....................................................38Monsanto Canada v. Schmeiser, 2004 SCC 34............................................................................................40Beloit Canada Ltd. v. Valmet Oy, 7 C.I.P.R. 205 (FCA)...............................................................................41Beloit Canada Ltd. v. Valmet Oy, 7 C.I.P.R. 205 (FCA)...............................................................................42Monsanto Canada v. Schmeiser, 2004 SCC 34............................................................................................44Free World Trust v. Électro Santé, [2000] 2 S.C.R. 1024..........................................................................45Whirlpool v. Camco, [2000] 2 S.C.R. 1067...................................................................................................46Linoleum Manufacturing Company v. Nairn, [1876] Ch. 834....................................................................47Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65...........................................................................................47

3. Case Studies.......................................................................................................................................................................................48a. Case Study 1: Creativity and the Law..........................................................................................................................................48

Fisher, “Theories of Intellectual Property”.................................................................................................49Stephen & Dennis, “Engineering Time: Inventing the Electronic Wristwatch”.....................................51Simon, “Creativity in the Arts and in the Sciences”..................................................................................51Bentley, Rodriguez & Gonzalez, “Honduran Campesinos and Natural Pest Control Inventions”.......52Fennell, “Group Identity, Individual Creativity, and Symbolic generation in a BaKongo Diaspora”. 52Aronson, “African Women in the Visual Arts”............................................................................................52von Hippel, Democratizing Innovation.........................................................................................................53Adarves-Yorno, Postmes & Haslam: “Creative Innovation or Crazy Irrelevance?”...............................54Fried, “Wilt Chamberlain Revisited”............................................................................................................55Dennet, “Memes and the Exploitation of Imagination”............................................................................55

b. Case Study 2: Myriad Genetics....................................................................................................................................................55Gold & Carbone, “Myriad Genetics: In the Eye of the Policy Storm”......................................................55Nuffield Council on Bioethics, “The Ethics of Patenting DNA: A Discussion Paper”.............................62

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Caulfield et al., “Evidence and Anecdotes: An Analysis of Human Gene Patenting Controversies”..62Gold et al., “Gene Patents: More Evidence Needed, but Policymakers Must Act”...............................63Madey v. Duke, 307 F.3d 1351 (headnote)..................................................................................................63Walsh, Cho & Cohen, “View from the Bench: Patents and Material Transfers”....................................63

c. Case Study 3: “Still Believe in Love”............................................................................................................................................63d. Case Study 4: Olympics...............................................................................................................................................................63

Bill C-47, An Act Respecting the Protection of Marks Related to the Olympic Games and the Paralympic Games and Protection Against Certain Misleading Business Associations and Making a Related Amendment to the Trade-marks Act, 1st Sess., 39th Parl., 2007..............64

“Inuit Praises Logo,” www.straight.com, 27 April 2005...........................................................................65Jane Armstrong, “The Friend Nobody Likes,” The Globe and Mail, 27 April 2005, A1.........................65Committee Evidence for Bill C-47 (selections)............................................................................................65Sally McCausland, “Art and the Olympics” (1999) ART+Law...................................................................66San Francisco Arts & Athletics v. U.S. Olympic Committee, 483 U.S. 522 (1987).................................66Juda Strawczynski, “Is Canada Ready for the Vancouver Winter Games?: An Examination of

Canada’s Olympic Intellectual Property Protection” (2004) 62 U.T. Fac. L. Rev. 213...........67Charles Hotel (Counsel to VANOC), “Ambush Marketing and the 2010 Winter Games”......................68

e. Case Study 5: “Power Tools” – IP and Development....................................................................................................................68TRIPS Agreement: http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm...................................69Doha Declaration on TRIPS and Public Health: http://www.wto.org/english/thewto_e/minist_e/

min01_e/mindecl_trips_e.htm...........................................................................................................69Cancun Agreement on Amending the TRIPS Agreement: http://www.wto.org/english/tratop_e/

trips_e/wtl641_e.htm.........................................................................................................................69Canada’s Access to Medicines Regime (Patent Act, ss. 21.01-21.2).......................................................70Idris, Intellectual Property: A Power Tool for Economic Growth, c. 2.....................................................70Idris & Arai, The Intellectual Property-Conscious Nation: Mapping the Path from Developing to

Developed, c. 1..................................................................................................................................71Musungu & Oh, “The Use of Flexibilities in TRIPS by Developing Countries: Can They Promote

Access to Medicines?”......................................................................................................................72Gerhardsen, “US Seeks Review of WHO Publication Policy After Report on US Trade Deals” (28

September 2006)...............................................................................................................................73Letter from William Steiger to WHO, 18 Aug 2006....................................................................................73UNCTAD, The Least Developed Countries Report 2007, c. 3....................................................................73Chen & Puttitanun, “Intellectual Property Rights and Innovation in Developing Countries”.............75

f. Case Study 6: Creative Solutions (Patent and Copyright).............................................................................................................76i. Patent.................................................................................................................................................................................... 77

PMPRB Annual Report 2006...........................................................................................................................77Gold, “Advanced Market Commitments”.....................................................................................................78Love & Hubbard, “The Big Idea: Prizes to Stimulate R&D for New Medicines”....................................79Gold, Piper & Morin: “Patent Pulls: Pooling Patents to Address Access to Medicines”......................80Graff & Zilberman, “An Intellectual Property Clearinghouse for Agricultural Biotechnology”...........81

ii. Copyright.............................................................................................................................................................................. 81Lessig, “Commons Among the Wired,” c. 4.................................................................................................81Thomson, “New Business Models in Music”................................................................................................83Doctorow, Down and Out in the Magic Kingdom........................................................................................83

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)

1. Introductiona. Intellectual and Industrial Property Generally

What is IP?o A property right, really no different than a property right in most other objects; a veto over the actions of

otherso Distinction between physical object and the idea embodied in it (a property right in a created idea)o Some arguments against IP rights centre on their ability to rob us of what is meaningful (e.g., LA Olympics given

rights over the word “Olympics”, and the Gay Olympics organisers brought a suit to use the word too, as it is a collective heritage that LA should not be able to “own”); IP law tends to assume a single moment of creation

o Each statute (patents, copyrights, trademarks) protects a given set of goods – but other goods (e.g., business methods) are contentious (what makes an idea truly “creative” or “created”?)

o Recently, IP law has been pushed wide openo 1992: over half of corporate assets became intellectual (often, the most valuable is the association of their name

with an object – this asset only exists because the consumer agrees that it exists)o Gold: we are now moving into a period of the opposite – a pulling back of IP law, as supreme courts exercise

more conservative tendencies than appellate courts CAs’ job has often been to take the law as presented and then to take a rights holder’s PoV – they’ve been

expansive in that sense They see more cases interested in streamlining and certainty The cost of this clarity is that some people don’t have access, etc. More technical: tend to be more interested in opening up rights

Supreme courts only engages once in a while, and when it does it addresses the big picture They tend to try to clarify where we’re going They tend to be more nuanced and balanced More policy-driven: tend to be more conservative, seeking balance

This is true in the US, where Federal Circuit Courts of Appeal have expanded the law, while the Supreme Court has created more exceptions or read exceptions more broadly, set stricter standards, etc.

The same type of pattern has happened in Canada, except for a little “myopia” around biotech that doesn’t happen elsewhere; SCC essentially introduced the concept of a “user right” in CCH (below)

The pattern is only continuing, as corporations are seeing that other (non-IP) systems may be more desirable

So: the age of “big IP” is ending; we’re moving to an era of the management of IPo The TRIPS-plus agreements aren’t getting through Congress anymoreo USTR is doing “training courses,” going after people’s minds – so others are giving courses to counter theseo We’re starting to see more and more approaches coming online (see Case Studies 1 and 6, especially)

IP statutes drafted with one thing in mind: many intellectual assets are easy to copy general acceptance that usually you cannot enforce your right statutes tend to give more rights to holder of property, so that when they do catch someone they can enforce their rights fully (i.e., vast array of formal rights, but difficult to apply)

Questionso How do you resolve a dispute between the designer of an object and the owner of the object?o How do you transact business regarding that object?o Is there a difference between owning the object and owning “object”?o Do IP laws truly protect, or are they just a “drag”? If they do not protect, what is their true purpose?

“Why do people create” is different from “do people need control over what they create”

b. Introductory Case StudiesFauchart and von Hippel: “Norms-Based Intellectual Property Systems: The Case of French Chefs”Summary

o Norms-based IP systems exist and are important component of/substitute for law-based IP systems (they are “real” IP systems)

o Norms-based IP systems operate on social norms held (may not be written, but are widely known and accepted as valid) by members of a given community, specifying nature/extent of rights that a group member can assert to IP

o Include procedures for claiming of IP rights, and community-accepted sanctions for violatorso Can be especially valuable where valuable IP is not protected by law-based systems

Recipes are not a form of innovation effectively protected by law-based systemso Recipes could be protected by trade secrecy lawo Seeking redress through courts is usually seen as too difficult and costly

Social norms amongst French chefso 1. A chef must not copy another chef’s recipe innovation exactly

Can develop variations Cf. patent protection Most recipes of advanced chefs are difficult for others to reproduce exactly without their help

o 2. If a chef reveals recipe-related secret information to a colleague, that chef must not pass the information to others without permission (cf. trade secrets protection)

o 3. Colleagues must credit developers of significant recipes/techniques as the authors of that information

Adherence to the norms of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Chefs more likely to provide information to colleagues whom they believe will adhere to the normso Violators are punished by a refusal to provide further information and by lowered reputationo In extreme cases, violators will be ostracised (even in the long term)o Group members who do not need to care about social rewards often conform less

Profiting from IPo Increased sales and profits if people adhere to the norms (and sharing is more likely where the recipient is

believed to adhere to the norms)o Reciprocity has benefits in new techniques/ideas (though revealing is done for information trading, not altruism)o Free revealing (cookbooks, magazines, TV) can be beneficial if authorship is acknowledged – but some chefs do

not reveal everythingo Chefs more likely to reveal high-value information in public forum, and low-value information to anyone who asked

Literature reviewo Social norms

Pervasive/powerful structural characteristics of groups that summarise/simplify group influence process Evidence that a norm exists is seen if departure is punished Enforceable when groups control stimuli that are (dis)valued by target person Bendor and Swistak (game theory): stability is maintained when all are treated as supporting the norm

unless they actually transgress, and when all must punish one who transgresses Rai: laws and social norms can have interdependent effects Once a critical mass of norms-violators is reached, rapid norm breakdown ensues

o Law-based IP rights systems 3 distinct types: patent (usually “utility” patent), copyright, protection of trade secretes IP owners can keep rights to themselves, or license/sell Do not cover new aspects of recipes

o Informal transfers of IP With high levels of mutual trust, information exchange networking can emerge Sometimes even “free revealing” can be economically beneficial If rent from trading (R) is greater than rent from withholding (R), trading will be valuable – and usually is

in the long term where reciprocity exists, and/or where free revealing is beneficial (e.g., through reputational increases

Comparison of law-based and norms-based IP systems

patents copyright trade secrecy social norms-based IPsource of authority legislation legislation legislation community social norms

subject-matter covered inventions as specified

“writings” as specified

secrets having business value

information regarded as proprietary property by a given community

nature of controlright to control use of publicly revealed information

right to control production of copies of work

right to prevent employees from revealing secret

right to use and call for sanctions against violators of norm-granted property rights

ownership rights established by date of first filing or date of invention

proof of authorship

proof that secret “not generally known”

community consensus that an individual is the owner of the specific information

conflict resolution method court decision or settlement

court decision or settlement

court decision or settlement

community members’ agreement that norm-sanction property rights have been violated

average time and administrative cost to determine if violation has occurred and to assess penalty

several years and millions paid by litigants



very rapid; low cost distributed across community

Further researcho Extent to which norms underlying such systems in various fields are similaro Impact of limited scope of norms-based systems relative to law-based systems

DiscussionThree social norms described for that communityChefs seems to disclose publicly (i.e., publish as recipes) the most, not the least, innovative forms of their recipes

o Don’t always disclose 100% of the most innovativeo The average person lacks the skill to reproduce it exactly – and even if (s)he does, it doesn’t/won’t affect businesso Amongst those who could compete by copying the recipe exactly, the first norm (no exact copying) would prevent

them from doing soSo: two things operating here

o 1. Set of norms of behaviour amongst certain peopleo 2. Technological barriers (here, skill)o The combination of these two aspects both constitutes the community and leads it to be innovative

Loshin, “Secrets Revealed: How Magicians Protect Intellectual Property Without Law”Magicians’ ability to control world depends on control of ideas/methods – but IP offers little assistanceStandard economic theory of IP holds that law delimits property rights to promote innovation – but magicians have few legal

rights to their IP, and innovation thrives of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)(Fashion: top designers want copying so that they can benefit from “induced obsolescence”)Magical community has developed unique set of informal norms and sanctions for violators, protecting IP in absence

of lawMagic and innovation

o Late 19th c.: magic comes into bloom as theatrical art period of innovation and development of institutionso Journals/books/dealers/organisations free flow of ideaso Magicians often keep ideas to themselves for the first while before eventually sharing themo Prestige/renown attaches to those who share with other magicians; pride in sharingo Evolutionary process of sharing has improved many tricks over the years (cumulative innovation)o Sharing occurs on different levels: “popular magic” (sold in shops); “common magic” (secrets and routines shared

by musicians in books/lectures); “proprietary magic” (select sharing among top performers)o Sharing is encouraged, but stealing is despised; theft of craft is regrettable, but not devastating, because

showmanship plays such a large part ripping off an “act” is more serious than ripping off a tricko Biggest threat to magicians’ IP is in exposure of magic secrets to the publico Those who are not bothered by exposure think that new illusions are inventible, and place more weight on

showmanship (but showmanship is necessary, though insufficient)o Exposure doesn’t have a non-rival characteristic: exposure destroys the value of the secret exposed

Limits of IP lawo Magicians seek to maximise productive sharing while minimising stealing/exposureo Traditional IP law forces magicians to make trade-offs they’d rather avoido Copyright: doesn’t apply to live performances; tricks cannot be copyrightedo Patent: earning protection would require revealing secretso Trade secrets: liability only attaches to those who acquire them through “improper means” (this has been used –

but doesn’t protect against discovering the secret to an illusion on one’s own, and then publicising it); doesn’t consider something secret when disclosed within an industry (courts view IP as inhering in individuals/firms, rather than industries); difficult to qualify who is an insider/outsider, who is a representative; does not allow magicians to share without bearing costs of exposure

IP without lawo Much of IP’s structure flows from idea that intangible property is non-rival, so IP holders should get something less

than full property righto Legal system offers magicians much potential for loss not used, but innovation still occurso “Common magic” as a common-pool resource (CPR), which requires defining boundaries and closing them to

outsiderso “Popular magic” achieves “misdirection” and keeps people occupiedo Access to “proprietary magic” is granted ad hoco Magicians’ norms

Crediting innovators: first person to perform/publish a trick gets credit for inventing it; derivative works to acknowledge and credit the original

Use of a new idea: if secret method has not been widely shared, nobody else can use it; if it has been widely shared, can be used freely; if dramatic presentation has been widely shared, can be used (but this is bad form); if trick was shared but has not been used for a long time, re-discoverer should be treated as inventor

Exposure: never expose a secret to a non-magician (including own secrets)o “Taller fences” around CPR than IP law provides, but shorter fences within the CPR communityo Enforcement: codes of ethics; standing/esteem in magic community; exposure treated most severely

Conclusionso Exceptionalism in IP theory: “negative spaces” in IP law can be filled by idiosyncrasieso Norms, buttressed by organic relationships and self-governing institutions, can create alternative IP

regimes – but these regimes are fragileo Courts should be more wiling to heed role of norms/idiosyncrasies in applying IP law

Example: class notesCan/do you share class notes? With everyone?

o You are less likely to ask someone you don’t know wello An expectation of reciprocity – if not from that specific person, from the community in generalo Universality of this reciprocity: if we don’t all buy in to the relationship of note-sharing, the “system”

won’t work when we need ito If you become known as someone who doesn’t reciprocate, you’re less likely to get help latero This is similar to the community of chefs – you want to be known as a reciprocator – though that community is a

little more personalised, based on relationships rather than general membershipYou lend your notes to someone, and then someone else asks them for these notes

o May depend on the medium: if paper notes, need permission to pass on; if electronic, more willing to pass them to others

o Some people feel more ownership over their notes than others doo The norm may be changing as notes become electronic

What if the norm is violated?o You tell your friends, and you and others may be more reticent to share notes with the violators in the futureo Reputational damage (does everybody care?)o This may be different in smaller communities like ours

Sharing summaries?o Complete reciprocation usually yields sharingo The effort of summarising can’t be transmitted; only the result

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o There is an distinct benefit (R, in the article’s parlance) in not sharingo Horizontal (within years) sharing: greater expectation of reciprocation; upper years’ summaries are shared more

easilyo Vertical (between years) sharing: reputational issues exist here too; somehow distasteful to suggest buying/selling

them – we belong somehow in a situation where norms of giving outweigh norms of purchaseo Questions of the effort expendedo If an upper-year gives you a fantastic summary, which norm should prevail – value/effort, or sharing? If the value is

in not sharing it, why does the effort matter?So: value, ease of copying, community norms, low cost (because great summaries don’t guarantee grades), reputation

(creating a good one or avoiding a bad one)Once the value is extracted (i.e., once you sit the exam), you have every incentive to pass it on because then the only choice is

between reputation and no reputationBut this is a complex and individualised mixture of incentives, motivations, and norms – yet we arrive at

approximately the same norms

Discussion: What is similar between the chefs and ourselves?Small community in which people know each otherTension between interdependency and competitionHigh barriers to entryReputation that will survive law schoolCan’t break one of the norms and gain an insurmountable advantage over competitors – gains from defection are marginalExternal adjudicators are those making the assessment – if it was peer-assessed, reputation may play a larger role“Us v. them”: chefs don’t care what the average person; we don’t care if law students elsewhere get AsExample: clothing designers

o Clothing designs are quickly copied – but designers still produce new designso They don’t care what’s being sold in box stores (their competition is each other)o Obsolescence helps them, because once their clothes become common people will want to buy new stuffo In the meanwhile, other designers won’t copy them because of the community normso Arguably, this speedy and fast competition helps those who innovate

Chefs, law students, magicians, etc. all seem to have similar normsThese norms develop from the mutual need of community membersCan you imagine a community with some but not all of these values? Would it fail?In all of these communities, creative things are being doneAlmost a lack of distinction between the physical and the metaphysical – the object of what is being shared (notes) is associated with

what it represents (knowledge)So: Why do we need intellectual property? Why do we need lawyers? Why not let communities self-organise where the values are

there to make it happen?o These values are not present in all cases (i.e., fundamental conditions may be absent, such as the value of

defecting being higher than the value of complying)o Prisoner’s dilemma: you can’t be sure of what your peers will do, so you arrive at a suboptimal solution

However, this dilemma is based on a one-off situation If you repeatedly go through the prisoner’s dilemma, you learn from it and norms develop But if rewards for defecting are high, even over the long term, the (potential) system breaks

downo Larger communities remove aspects of caring, relation, reputation, and mutual enforceabilityo Enter IP law, which can increase the cost of non-compliance

But if the norm didn’t develop within this community, why should the state intervene? Innovation will happen where the community has an incentive for innovation to happen – but if our own

norms cannot protect it, will innovation stop? We don’t know what a world without IP will look like – we can’t be sure that people will stop

innovating (we’ve had innovation without IP, but we’ve not seen a modern economy without IP)o IP law arguably prevents strife and conflict – but if there were no norms, there would be no strife for breaking normso The state may be interested in the norm of distribution, seeking to move innovation into widespread practiceo The state may pursue efficiency gains (e.g., saving people’s search costs through enforcing trademarks) through

IP lawo Or, powerful groups may co-opt the state to create a norm, label non-compliance as defection, and punish people

for ito So: is IP law solving a problem, or creating a problem where none existed?

As we move onwards, we will examine the relationship between the legal norms and community norms o E.g., there are speed limits, but people don’t follow them and police don’t arrest those who breach them slightlyo E.g., downloading software is illegal, but people do it – and yet they still seem to follow some kind of norms

2. Modalities of ordering IP spaceNo such thing as an “origin” of IP, as the legal regimes we will study developed separately and independently – but, at same

time, consider commonalities between themEach of the regimes below sets out a regime for a specific class of ideas (trade-marks = marks, copyright = works, patent =

inventions) – but not every object within that class might get protectionEach is protected through particular means: individual + CIPO (trade-marks); CIPO (patents); individual (copyright)Exceptions to protection are provided in certain circumstances

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)a. Trademarks

What is included?What does trade-mark protection do?

o Regulates practices related to branding of goods and services; the link in the customer’s brain between a mark and a reputation

o Essence of rights: to protect goodwill as it is embodied in a mark; permitting companies to build on such goodwill (Goodwill is not a solely commercial idea; it applies to public institutions as well) Origin: mid-19th c. desire to protect consumers from fraud Now: modern priority is goodwill; also gives positive incentive to holder of mark to increase

quality and consistencyo Common law of passing off

You’re not allowed to pass off to a customer something using a name/symbol/feature that does not belong to it

Focus is on misrepresentation and consumer confusion – though most often invoked by victim company rather than by consumer, as they are best placed to protect the consumer

Must show that the mark was known by the people in a given areao Trade-marks Act: passing off “plus”

Trade-mark law came later than passing off; various IP statutes were being codified through judicial decisions beginning late 19th c. Trade-marks Act

Simplifies the burden of proof in passing off by establishing a national registry and establishing nation-wide coverage; harm is presumed

Constitutional issue: passing off is a provincial matter under property and civil rights; trade-mark and all IP is a federal matter

Closer to protection of commodity than regulation of useWhat is a trade-mark?

o Marks and guises identifying trade source of goods and services Most common are visual symbols and words – but also includes works, phrases, designs, shapes, “get-up”

(e.g., colour scheme of a Macdonald’s restaurant), colours(?), sounds(?) Also certification marks (standard, not origin: e.g. the CSA logo; “this is a green product”) Anything can be trademarked that “points toward” the goodwill in question

o Rights created by use Protects the association, not the mark itself But whether something really comes from Coca-Cola is unknown; you don’t know where it’s from, but you

feel the goodwill – and you don’t even get the same beverage everywhere you go No creation required for the protection – but the person/organisation is responsible for the goodwill

o Distinctive; cannot be merely descriptive The trade-marked “pointer” cannot point in five different directions So: can’t trade-mark “orange” to protect the fruit, but can trade-mark “orange” to protect the cell phone

company The line is blurry, but something that is purely descriptive cannot be trade-marked – this is why many

companies make up new words, because they have no associations at allDistinguishing marks, certification marks, distinguishing guises, names and surnames

o Distinguishing marks

Trade-marks Act, s. 2: “trade-mark” means(a) a mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold,

leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others,(b) a certification mark,(c) a distinguishing guise…

o Certification marks

Trade-marks Act, s. 2: “certification mark” means a mark that is used for the purpose of distinguishing or so as to distinguish wares or services that are of a defined standard with respect to

(a) the character or quality of the wares or services …(d) the area within which the wares have been produced or the services performed,

from wares or services that are not of that defined standard.Trade-marks Act, s. 23(1): A certification mark may be adopted and registered only by a person who is not engaged in the manufacture, sale, leasing or hiring of wares or the performance of services such as those in association with which the certification mark is used.Trade-marks Act, s. 23(2): The owner of a certification mark may license others to use the mark in association with wares or services that meet the defined standard, and the use of the mark accordingly shall be deemed to be use thereof by the owner.

Standards councils, e.g., organic food Can also reference other aspects, e.g., “Montréal” to mean “made in Montréal”

Institut national des appellations d’origine des vins & eaux-de-vie v. Andres Wines Ltd., 60 O.R. (2d) 316 (HCJ)FactsAWL (and others) market some products as “Canadian Champagne”Institut (and others) seek: injunctive relief restraining AWL from using appellation “Champagne” in manufacture/sale of products;

damages for loss of sales, diminution of market, and depreciation of goodwill

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Issues: is “Champagne” a generic term?Holding (Dupont): see belowConcurrent sale of Canadian champagne has not reduced sales of French productGovernment has required that Canadian sparkling wine be called “Canadian champagne” since 1956; this policy has received

provincial and federal approval for many yearsCanadian champagnes compete with each other, but not with French champagneAWL claims that “champagne” has become an everyday term – but “Champagne” has only one meaning (related to its origin, and

process of making it)French monopoly of the word has suffered setbacks“Champagne” has acquired generic attributes – but at the most it is semi-generic; does not refer to entire class of productsNo problem that AWL benefitted from goodwill associated with Champagne; as long as it doesn’t make a connection with French

store, no problem

o Distinguishing guises

Trade-marks Act, s. 2: “distinguishing guise” means(a) a shaping of wares or their containers, or(b) a mode of wrapping or packaging wares the appearance of which is used by a person for the purpose of distinguishing or so

as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others

Moving away from a pure symbol to something that is functional – butting up against patent law, which is supposed to cover functional features

If this means is the best way to make the product function, it is functional and should be patented instead, but if it is partly symbolic, it is protected here

So: does not cover purely ornamental or purely functional features Registrable only after becoming distinctive through use – must be proven (usually by surveys) Idea: we don’t want people to be able to appropriate physical things overmuch

Trade-marks Act, s. 13(1): A distinguishing guise is registrable only if(a) it has been so used in Canada by the applicant or his predecessor in title as to have become distinctive at the date of filing an

application …; and(b) the exclusive use by the applicant of the distinguishing guise in association with the wares or services with which it has been

used is not likely unreasonably to limit the development of any art or industry.

o Names and surnames

Trade-marks Act, s. 12(1): … a trade-mark is registrable if it is not(a) a word that is primarily merely the name or the surname of an individual who is living or has died within the preceding

thirty years….

“Macdonald’s” is someone’s last name, but if over time if becomes distinctive and the consumer ceases to associate it primarily with someone’s name and instead with the product (secondary meaning), it can be trade-marked

This requires the development of a brand image over time – initially you have zero protection, then you get passing off, and eventually you get trade-mark protection [remember that CML passing off and trade-marking are not mutually exclusive]

The issue is whether anybody else has the name – and the regulatory body can look it up in phone books to make a determination

So: people engage the trade-mark system not when initially developing goodwill but instead afterwards (again, this is why so many people use made-up names)

What are the criteria for protection?Distinctive/descriptive nature required for registration

Trade-marks Act, s. 12(1): Subject to section 13, a trade-mark is registrable if it is not(b) whether depicted, written or sounded, either clearly descriptive or deceptively misdescriptive in the English or French

language of the character or quality of the wares or services ….

o Must show that it is already distinctive or that it has become so; mark must actually distinguish products and services between firms

o Normally, descriptive words cannot be protected Cannot remove descriptive words from public domain Effect would be to prevent competitors from advertising their goods and services

o Descriptive words can become distinctive Acquiring secondary meaning

o Word’s initial meaning replaced in buyer’s mind with secondary meaning relating to a particular product or serviceo E.g. “Shredded Wheat” has acquired a secondary meaning

Disclaimingo Mark as a whole is distinctiveo Individual elements of mark are merely descriptive and must remain in the public domaino “Pizza Pizza” as a whole protected, “Tim Horton’s – Always Fresh” is protectedo “Pizza” or “Always Fresh” on their own are disclaimed: you deny yourself their use

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What is the scope of the right?Protects use of the mark, not the mark (e.g., can say “Nike” and talk about it, or even draw the Swoosh, but not “use” the

symbol)Non-use could lead to loss of protection: the goodwill is unlikely to remain after prolonged non-useProtection as long as the association between mark and goods/services exists

o Potentially indefinite, no fixed term like copyright and patento e.g., Coca Cola

But: “use it or lose it!”

Trade-marks Act, s. 45(3): Where … it appears to the Registrar that a trade-mark, either with respect to all of the wares or services specified in the registration or with respect to any of those wares or services, was not used in Canada at any time during the three-year period immediately preceding the date of the notice and that the absence of use has not been due to special circumstances that excuse the absence of use, the registration of the trade-mark is liable to be expunged or amend accordingly.

o Registrar will rarely do this by him/herself; usually happens based on complaint/challengeBecoming generic: too much use?

Trade-marks Act, s. 18(1): The registration of a trade-mark is invalid if …(b) the trade-mark is not distinctive at the time proceedings bringing the validity of the registration into question are

commenced….

o Becomes descriptive rather than distinctive (becomes generic)o Linoleum (began as a brand-name, but became too associated with the product even when made by other

companies), Thermos, Shredded Wheat o This is why companies plaster Rs (registered trade-mark) and TMs (CML trade-mark) all over things, to highlight the

brandedness rather than the generic meaning, and why they say things like “Band-Aid brand bandage” instead of “Band-Aid”

o Particularly problematic in the case of patented products, which are only associated with one name for a long time – so companies may try to develop an “object name” for the thing itself and then a mark for their particular name (e.g., pharmaceutical companies that name the molecule and then give it a brand name too)

Linoleum Manufacturing Company v. Nairn, [1876] Ch. 834FactsWalton obtains several patents for preparing floor-cloth, which he named “Linoleum” (not previously used)Walton forms LMC, to which he assigned his patentsAfter patents expired, N proposed to make and sell Linoleum under that nameLMC claims trademark in the word, now infringed by N (i.e., misrepresentation that N’s goods are made by LMC)Issue: did N infringe LMC’s trademark in the word Linoleum?Holding (Fry): no NairnDown to present time, no one other than LMC has made “Linoleum”Does not appear that any other name has ever been given to this substanceIf “Linoleum” means a substance that may be made by N, N may sell it by that nameLMC claims that Linoleum bears this name, but the name has always meant LMC’s product – but word means primarily the product,

and only secondarily LMC’s productIf N wants to call its product by the only name that it bears, it may do soRatio: if plaintiff has invented a new subject-matter and uses merely the name distinguishing that subject-matter, but not a name distinguishing that subject-matter as made by them from the same subject-matter as made by others, no infringement if defendant uses that name

So: overuse and underuse are both problematic for companiesRight is granted for fifteen years, renewable (Act s. 46(1))

Passing offCommon law action enacted in s. 7 of the Trade-marks Act (tries to bring CML of passing off into TM law)

Trade-marks Act, s. 7: No person shall …(b) direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in

Canada, at the time he commenced so to direct attention to them, between his wares, services or business and the wares, services or business of another

o So, if trade-mark action fails (e.g., for technical mistake), can bring a passing-off suit that supersedes jurisdictional issues amongst provinces

o Until Lego case, unsure if this offended division of powers – now considered ancillary to the federal trade-mark powers

o Many cases are brought under TM law and in the alternative under passing off – like a back-up plano A uniform test across Canada, regardless of provincial legal developmentso Provincial rights of action still exist, and federal courts do draw on them for interpretive assistance (though you

might not be able to bring a case under provincial courts if you fail at the federal level, because of res judicata)There is a broader notion of CML passing off, but we’ll confine our understanding to s. 7(b) above – the language of s. 7(b) is broad

enough, and courts have handled it in such a way so as, to continue to be treated as the CMLCML interpretation of IP is dominant and courts have moved this way in the last 5-10 years– despite that federal legislation is

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o CML IP law is more grounded in commercial usage and value (this is what Canada has followed)o CVL IP law is more grounded in the connection between an author and his/her work

What passing off protectso Protection of unregistered trademarks against misrepresentation (as to origin)o Use of name or get-up (scope of this is unclear) directly to sell competing producto Does not protect against dilution

Decreasing the cachet effect of the protected goodwill E.g., selling something as “the champagne of ginger ale” dilutes the goodwill towards champagne, but is

not protectedElements of passing off

o Must have goodwill or reputation attached to goods or services A proof issue that is not faced by those bringing a trade-mark suit But the CML is also more flexible, and should be able to adapt to new circumstances

o Active misrepresentation by defendant to the public leading or likely to lead to conclusion that goods or services are those of plaintiff

o Resulting or likely to result in damage from belief engendered by misrepresentationSo: the law of passing off continues to develop, esp. at the provincial level

Reckitt & Colman Ltd. V. Borden Inc., [1990] 1 W.L.R. 491 (HL)FactsR&CL marketed lemon juice in plastic lemon-shaped containers under “Jif” brand nameR&CL had policy of bringing or threatening to bring proceedings for passing off against traders using (or planning to use) similar

containersBrand loyalty developed amongst purchasing publicBI prepared to sell lemon juice in slightly different plastic lemon-shaped containers, but did not undertake marketing to familiarise

the public with their new productIssues: (1) Is R&CL’s product get-up associated in the minds of substantial numbers of purchasing public with Jif juice? (2) If yes, does Bis product get-up amount to a misrepresentation that the are selling Jif juice? (3) If yes, is it likely on balance of probabilities that substantial numbers of the public will purchase BI’s juice believing it to be Jif juice? [this is the test]Holding (Lord Oliver of Aylmerton): (1) Yes. (2) Yes. (3) Yes. Reckitt & Colman Ltd.These are all questions of fact, not lawThis is a quia timet proceeding, so little chance for either side to observe actual reactions of the public to these productsBI claims that R&CL is not seeking to protect trade goodwill but rather the product itself (treating article as its own trademark, thus

establishing in the article itself a monopoly that the law does not permit), that article cannot constitute the special insignia of its own origin – but it is not clear whether the configuration of an object is incapable of protection

Need not pursue argument further, though, because BI is identifying the contents with the container; only question is whether R&CL, having acquired public reputation for Jif juice by selling it one way, can legitimately complain of BI’s sale of similar containers

Rejects suggestion that container is an object in itself rather than part of the get-up under which R&CL’s produce is soldQuestion is whether BI’s action constitutes a misrepresentation that their juice is Jif juice – whether this results from their whole get-

up or only a part of that if the public is in fact deceivedBI claims that R&CL is trying to protect a “descriptive term” embodied in the container – but because there has been a monopoly for

so long, public will make erroneous assumption that BI’s article emanates from similar sourceBI claims that it is just making use of an ordinary selling technique – but this argument begs the question, beginning with the

premise that the plastic lemon-shaped container is an ordinary selling techniqueR&CL must demonstrate that the container has become so closely associated with Jif juice as to acquire secondary meaning of

indicating Jif juice – true hereContainer is indicative of its contents – no reason why it should not also be indicative of the sourceBI has not sufficiently distinguished its goods from R&CL’s; it is not for R&CL to suggest what more BI should do; injunction grantedRatioElements of successful passing-off action: (1) goodwill or reputation attached to goods/services; (2)

misrepresentation by defendant to the public (whether public is aware of plaintiff’s identity as manufacturer/supplier of goods/services is immaterial); (3) (likely) suffering as a result of misrepresentation that source of both goods is the same

Mere fact that the public may confuse the two products is insufficientNo answer that the public would not have been deceived if they were more careful (“The law of passing off does not

rest solely upon the deceit of those whom it is difficult to deceive”)Concurrence (Lord Bridge of Harwich)De jure monopoly is not conferred on R&CL because deceit is at issue here and BI has the opportunity to clarify the situation for the

publicDe facto monopoly is however conferred because R&CL has been sole seller for so long poor result but unavoidableConcurrence (Lord Brandon of Oakbrook)Concurrence (Lord Goff of Chievely)Concurrence (Lord Janucey of Tullichettle)Passing-off action prerequisites: goods have acquired a reputation in the market and are known by some distinguishing feature;

misrepresentation (likely) deceives and plaintiff will suffer damageNot essential that defendant should misrepresent his goods as those of plaintiff; sufficient that he misrepresents his goods in such a

way that plaintiff’s goodwill can be reasonably foreseen to be damagedA.G. Spalding & Bros v. A.W. Gamage Ltd.: valid passing-off action involves (1) misrepresentation (2) made by trader in course of

trade (3) to prospective customers of his or ultimate consumers of goods or services supplied by him (4) that is calculated to injure the business or goodwill or another trader (reasonably foreseeable) and (5) that causes actual or likely damage to a business or goodwill of the trader by whom the action or brought

CML protects goodwill in misrepresentation by recognising monopoly in a get-up, but will not recognise monopoly in the article itselfLikelihood of deception is only issue in this appeal

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Cannot claim monopoly in use of container which is in common use; can only protect “capricious additions” that distinguish one

trade’s use of a container from another’sMust take consumers as you find them, including the imprudent and the unwaryHere, shape and colour of container identifies contents, and label serves only to identify manufacturer less need for customer to

look at label a different label won’t be enoughAcquisition of secondary meaning is a question of factCannot compare lemon-shaped, lemon-sized container to an “ordinary get-up”BI has not taken sufficient steps to distinguish its products from R&CL’s

Institut national des appellations d’origine des vins & eaux-de-vie v. Andres Wines Ltd., 60 O.R. (2d) 316 (HCJ)FactsAWL (and others) market some products as “Canadian Champagne”Institut (and others) seek: injunctive relief restraining AWL from using appellation “Champagne” in manufacture/sale of products;

damages for loss of sales, diminution of market, and depreciation of goodwillIssues: (1) Can the Institut and others claim shared goodwill? (2) Are AWL and others passing off their products as the Institut’s (and others’)? (3) Is the Institut estopped from bringing this claim 50 years after it became actionable?Holding (Dupont): (1) Yes. (2) No. (3) Yes. Andres Wines Ltd.1. Shared goodwillIf approved, shared goodwill would allow all 16 plaintiffs to have common cause of action; each claims on its own (distinguish from a

class action, where claims are advanced on behalf of unnamed persons in a particular class)Institut does not claim that AWL is passing off its wine as manufactured by any one of the plaintiffs, but rather that it is passing off

its wine as champagneIn intervening years, AWL and others have built a viable and successful indigenous, Canadian champagne industryFact that plaintiffs are asserting a shared right to use the name champagne does not disentitle them to protect the

name by a passing off action“Spanish champagne” case: each Champagne house entitled to goodwill in word “Champagne”, which constitutes part of house’s

own goodwill in its business; value of the appellation is not in relation to Champagne market but rather to wider wine market; depreciation of the appellation would damage the particular Champagne house in its trade

Absence of connecting identity between defendant’s and plaintiff’s gods is not fatal to the claim; passing off their product as champagne would have been enough

Registration of appellation under Unfair Competition Act counts as a valid registration2. Passing offElements: (1) reputation/goodwill in a product; (2) misrepresentation (capable of) leading to deception; (3) likely (leading to)

damage to goodwill/reputationUnfair trading simpliciter is not a cause of action unless it encompasses all of these elements(1): Champagne has high reputation around the world; AWL was benefitting from use of term champagne; (2): No actual deception need be established; AWL represented to the public that its goods were somehow associated with

champagne; could lead consumers to buy one rather than the otherConsumers Distributing (SCC, 1984): passing off is making a false representation to the public likely to induce them to believe that

goods of another are those of the plaintiff; test is false representation likely to cause confusion/deception, regardless of intentionConcurrent sale of Canadian champagne has not reduced sales of French productGovernment has required that Canadian sparkling wine be called “Canadian champagne” since 1956; this policy has received

provincial and federal approval for many yearsCanadian champagnes compete with each other, but not with French champagneAWL claims that “champagne” has become an everyday term – but “Champagne” has only one meaning (related to its origin, and

process of making it)French monopoly of the word has suffered setbacks“Champagne” has acquired generic attributes – but at the most it is semi-generic; does not refer to entire class of productsNo problem that AWL benefitted from goodwill associated with Champagne; as long as it doesn’t make a connection with French

store, no problem(3): no direct evidence of confusion; if there was confusion, surely it would be documented by now3. Delay and acquiescenceCanadian product first appeared pre-1930, but Institut is acting only now (that Champagne sales have fallen) estopped from

bringing the action because it has induced relianceMere delay cannot deprive plaintiff of legal rights – but combined with length of delay and nature of intervening acts, it can be

determinativeInstitut did not acquiesce as understood by law (giving up/abandoning right associated with term Champagne) – but did delay too

longSo: Canadian Champagne is a distinctive product not likely to be confused with French Champagne; public not misled4. DamagesInstitut suffered little damage and its market share has continued to growReference ordered to determine total financial loss suffered by AWL, diminution of ON’s market for French champagne, and

depreciation of goodwillNo justifiable claim for exemplary damagesRatioGoodwill can be shared by many producers in a shared name or characteristicElements of passing off: (1) reputation/goodwill in a product; (2) misrepresentation (capable of) leading to deception;

(3) likely (leading to) damage to goodwill/reputationMisrepresentation occurs if conduction/deception of the public results from concurrent sale of the two productsUnreasonable delay (i.e., long delay + intervening acts) can bar a claim for passing off

InfringementProtection of registered trademarks against unauthorized use (ss. 19, 20, 22)Broader protection than mere passing off alone (set out in s. 7)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Infringement is “passing off plus”: additional protection comes with registration

o Canada wide: not limited to locality of reputationo No proof of damage requiredo Can prevent use of different but confusingly similar marks even if used for different types of goods/serviceso Protects against dilution

Defining “use”o Invoking the symbol to draw directly upon the goodwill associated with a producto Wares

Trade-marks Act, s. 4(1): A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.

Advertising doesn’t count – it only counts at time of sale (cf. services, below)o Services

Trade-marks Act, s. 4(2): A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services

Advertising counts (Gold: unclear why this is the case – cf. wares, above)Methods of infringement

o Section 19: Exact imitation “Literal infringement”: using the thing exactly in the form in which it is protected Protects association

Trade-marks Act, s. 19: …[t]he registration of a trade-mark in respect of any wares or services…gives to the owner of the trade-mark an exclusive right to the use throughout Canada of the trade-mark in respect of those wares or services…

Marks are registered with reference to particular fields – you must then maintain use in these fields or else lose protection

o Section 20(1): Confusion Substantial [non-literal] infringement Does not require exact imitation Protects association

Trade-marks Act, s. 6(2): The use of a trade-mark causes confusion with another trademark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general classTrade-marks Act, s. 20(1): The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name…

Test: likelihood of confusion (would a consumer likely be confused?) Relevant timeframe is the moment of sale Closer to the passing off test It’s just fine for the competitor to make you think of the other product and think that the new one

is similar or similarly good (i.e., to invoke the other product) Relevant considerations for confusion

Inherent distinctiveness of the marks and extent to which they have become known (related to the attention that the consumer gives to the product, which is in turn linked to the value: compare a bar of soap with a car)

Length of time the marks have been in use Nature of the wares or services Nature of the trade or commerce Degree of resemblance between the marks in appearance, sound or ideas suggested by them

Attention and confusion If there are differences between products, how much attention do we expect the public to pay to

the packaging, ads, etc.?

Reckitt & Colman Ltd. V. Borden Inc., [1990] 1 W.L.R. 491 (HL)Facts: see aboveHolding (Lord Oliver of Aylmerton)Question is whether BI’s action constitutes a misrepresentation that their juice is Jif juice – whether this results from their whole get-

up or only a part of that if the public is in fact deceivedMere fact that the public may confuse the two products is insufficientNo answer that the public would not have been deceived if they were more careful (“The law of passing off does not

rest solely upon the deceit of those whom it is difficult to deceive”)Finding of infringement depends on testing sample consumersConcurrence (Lord Janucey of Tullichettle)Likelihood of deception is only issue in this appealMust take consumers as you find them, including the imprudent and the unwary

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Always a question of fact and degree to what extent customers are genuinely deceived by the overall impression of

the get-up

What about professional consumers?

Eli Lilly & Co. v. Novopharm Ltd., 147 D.L.R. (4th) 673 (FC-TD)FactsEli Lilly US owns Prozac trademark for fluoxetine; Prozac was a widely successful drug; distributed in Canada by EL&C pursuant to an

exclusive distribution agreementAnticipating 1996 patent expiry, EL&C decided to market fluoxetine as a generic also granted to generic supplier PMS the right to

use product appearance of EL&C fluoxetine products in association with fluoxetine supplied to PMS by EL&CPMS’s generic product sold for 30-35% less than Prozac on the Canadian marketNL began using similar capsules in its sale of fluoxetineIssue: can NL use, for its generic product, capsules similar in size, shape and colour to EL&C’s?Holding (Reed): yes Novopharm Ltd.Before Ciba-Geigy (SCC, 1992), thought that similar appearance of prescription medicines would not give rise to a passing off action

because professionals, not eventual consumers, were the customers – and professionals would not be deceivedCiba-Geigy held that it was relevant to consider the ultimate consumer (patient) when deciding whether passing off had occurred1. The process of selling prescription drugsPrescription drugs cannot be directly advertised to the public; marketing is directed at physicians and pharmacistsPrescription drugs cannot be purchased without prescription; overriding consideration in choosing a prescription medication is

knowledge and recommendation of doctor, who does not choose based on appearancePhysicians’ prescribing practice is not standardInnovator’s product, when the only one on the market, tends to become a surrogate for the chemical name of the drugSubstitution laws authorise pharmacists of dispense interchangeable brands of a drug (though physicians can write “no substitution”

prescriptions)If patient informs pharmacist about the brand he wants to purchase, no likelihood of confusionPharmacists purchase directly from pharmaceutical company or from wholesaler; once a patent expires, will carry at least patented

and one other brand generic’s lower price reduces patented product’s market shareHospitals purchase based on best price, and usually only carry one brandPharmacists and hospitals do not purchase based on appearanceWhen generics have entered the market, they’re usually of the same colour, size, and shape consumers not used to different

appearances for same drug pharmacists will choose to stock/dispense a look-alike version as opposed to a non-look-alike version

Customer usually does not see capsules at point of purchase; usually only sees drugs when back at homeConflicting evidence about how much pharmacists orally inform patents about the particular brand of drug being dispensedNo difference in quality between generic and brand-name versionsPlacebo effect can play a role in patients’ healthPhysicians are reluctant to change drugs once they find one that works2. EL&C’s trademark assertionsEL&C’s capsules are standard size; two-colour capsule is not inherently distinctiveNL chose to copy EL&C’s capsule design because in Canada the appearance is associated with the drug – but did not intend to pass

offNL’s capsules are not entirely identical, but differences only become obvious on close inspectionActual customer base for fluoxetine changes over time(Discussion of poorly done and well done surveys on patient perceptions, of credible and non-credible witnesses)EL&C claims that patients have a right to know which drugs they are purchasing, and that colour plays a role in this3. Legal analysisEL&C’s distribution agreement did not give EL&C the right (or direct EL&C) to use the capsule appearance as a trademarkUse of capsule appearance in association with two different trade source designations (EL&C and generic) creates lack of

distinctiveness EL&C’s claim failsUnder Act s. 7(b), EL&C must prove misrepresentation to customers – but NL’s product appearance does not lead customers to

request NL’s product; customers don’t choose based on appearanceNL uses identical colouring to demonstrate therapeutic equivalence, not to misrepresent their productWhat matters is if customers have come to regard both products as having one source, even if they don’t know that sourceEL&C must first show that it has selected a novel design – but failed capsule appearance is not a distinguishing feature of EL&C’s

fluoxetineEL&C must demonstrate likelihood of confusion arising from NL’s use of similar capsule appearance – but no evidence of confusion

hereNew customers won’t be confused (haven’t seen it before); returning customers associate appearance with character of medicine,

rather than source; those doctors or customers who want no substitutions can request itPolicy reasons support a similar get-up: doctors and nurses in a hurry in a hospital should be able to recognise character of pills

reduces risk of mismedication – and this is not confusion at the point of sale, but rather confusion afterwards, which is not subject to the law

RatioDegree of likelihood of confusion that will support a passing off claim varies with facts of each caseWhere appearance is associated with character of product, rather than source, a similar get-up will not create

confusion and thus will not constitute passing offWhere policy reasons support a similar get-up, similarity is acceptableWhere consumers are discerning or explicitly do not care about appearance of product, infringing this appearance

may not be passing off – though eventual customer should be considered

Confusion and famous marks: opportunities for confusion and dilution rise considerably as fame of mark rises (see Veuve Clicquot, Mattel)

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Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824FactsVCP has made high-end champagne since early 19th c.; BCL runs women’s wear shops in QCVCP seeks to stop BCL from using trade-name Cliquot (even spelled differently) and to have these TMs expunged from RegisterIssue: does BCL’s use of Cliquot create source confusion amongst consumers contrary to s. 20 of the Trade-marks Act?Holding (Binnie, for the Court): no Boutiques Cliquot LtéeVCP deserves protection fro free-riders and those who create confusion or depreciate value of good willThis case is about “famous” TMs, which transcend a circumscribed field of wares, services, and businessesOnus is on VCP to prove likelihood of confusion on a balance of probabilitiesThe “purpose of trade-marks is to function as a symbol of the source and quality of wares and services, to distinguish those of the

merchant from those of another, and thereby to prevent ‘confusion’ in the marketplace”“Confusion” to be understood particularly as a belief that the goods are manufactured, sold, leased, or hired by the same person“The test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry”Fame presupposes that mark transcends at least to some degree the wares with which it is traditionally associated; VCP’s name

crates an “aura of luxury”Whether VCP’s fame extends into other domains is a matter of evidence, not assertion – to be assessed amongst other factorsFactors to consider include those enumerated in Act s. 6(5), which will take varying importance depending on circumstanceInherent distinctiveness: VCP has acquired strong secondary meaning; BCL’s marks are not famousDuration of use: VCP for over 100 years; BCL since 1995Nature of wares: no evidence shows consumers associate VCP with mid-priced women’s clothing – but question here is likelihoodNature of trade: different channels of trade/distributionDegree of resemblance: goods need not be identical, but “same idea” must be conveyed to somewhat-hurried consumer; mark

protected not as isolated object but as indicator of source; value of a mark is this indicationSo: VCP’s broad association with “luxury goods” does not create confusion with mid-priced women’s clothingRatio“Undoubtedly fame (or strength) is a circumstance of great importance because of the hold of famous marks on the

public mind”“Confusion” to be understood particularly as a belief that the goods are manufactured, sold, leased, or hired by the

same person“The test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry”Factors to consider include those enumerated in Act s. 6(5), which will take varying importance depending on

circumstance: inherent distinctiveness; duration of use; nature of wares; nature of trade; degree of resemblanceNotes: this test would be different for a non-routine product – and arguably should be different for VCP itself

Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772FactsMI owns TM of Barbie dolls3CI opened first Barbie’s restaurant in Montreal in 1992, and now has one otherMI commonly licenses its TMMI opposes 3CI’s application to register TMs in connection with its Barbie’s restaurants on basis that use of the name would create

confusion in the marketplaceTrade-marks Opposition Board found for 3CIIssue: does 3CI’s use of “Barbie’s” create confusion with MI’s “Barbie”?Holding (Binnie, 7-0-1 concurring): no 3894207 Canada Inc.1. TM lawUnlike patent or copyright, TM owner not required to provide public with novel benefit in trade for the monopolyPower of attraction of TMs and other famous brand names now recognised as among the most valuable of business

assetsLegal purpose of TMs continues to be their use in distinguishing source of goods (consumer protection legislation)TM law rests on principles of fair dealing, holding balance between free competition and fair competitionMust not create exclusivity/protection that overshoots purpose of TM lawOnus remained on 3CI to establish absence of likelihood of confusionStandard of review determined by test in Dr. Q. (2003): privative clause (here, full right of appeal); Board’s expertise (here, it has a

lot); purpose of the Act (here, Board deciding a case as between only two parties); nature of question (here, legislature intended answer to be within tribunal’s jurisdiction) reasonableness standard

Admission of survey evidence: if findings are relevant and conduct was proper, reliable, and valid, courts are receptive; surveys excluded if those surveyed are not relevant population; TM used in survey is not TM applied for; wrong question asked; partiality

Post-1953 Act amendment, “famous brands” were given more protectionPink Panther restricted this protection to “exceptional circumstances, if ever” where there was a “connection” or “similarity”

between wares/services associated with famous mark and those of the newcomer – but this bar is too high, and circumvents Parliament’s intent that newcomer’s services need not even be in same general class

If there is no likelihood of a link no likelihood of mistaken inference no confusion2. ApplicationMI’s case is based on overgeneralisation: fact that Parliament has recognised that some TMs are so well known that their use in

connection with any wares/services would generate confusion does not mean that Barbie has that transcendenceName “Barbie” is not inherently distinctive of MI’s wares – but massive marketing has created strong secondary meaningMI argues that Barbie TM now transcends the products it originally served to distinguish – this is a question of factSurvey was faulted for criteria above, and also lack of information to those surveyed; exclusion of respondents aware of Barbie’s

restaurants; suggestive questions reasonable to exclude this evidenceNo credible evidence that Barbie was used in Canada by MI or licensee in connection with restaurant servicesMI argues that Barbie’s TM is famous, so cannot now be used on most consumer wares and services without leading the consumer to

infer a link – but Trade-marks Opposition Board found Barbie’s fame to be tied to dolls and doll accessoriesInherent distinctiveness: Barbie has a strong secondary meaning

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Length of time: Barbie has deeper rootsNature of wares: Barbie now part of pop culture, but not necessarily a positive association; its specificity may constrain its potential

for growthNature of trade: MI and 3CI operate in different channels of trade; wares/services do not intermingleDegree of resemblance: considerableOther circumstances: evidence of actual confusion would have been helpfulOn the evidence, prospective consumers will not likely infer that whoever owns the Barbie TM is associated with 3CI’s restaurantsRatioConfusion standard: “the point of view of the average hurried consumer”, who should still be given some credit for

intelligence who should be considered based on the attention likely to be given to a particular purpose, and who may have other circumstantial characteristics

Different factors (incl. fame) may be given different weight in different situations – though difference in wares and services will often (though not always) be an important consideration

Important aspect of TM legislation is actual use (“use it or lose it”)Factors to consider: inherent distinctiveness and extent to which they have become known (incl. differences and

similarities with new product); length of time in use (only as applied to distinctiveness, a question of fact); nature of wares/services (“product line” will be a significant obstacle; overuse can destroy distinctiveness; cannot speculate on future diversification); nature of trade (incl. nature/kind of consumer likely to buy); degree of resemblance; other circumstances

Irrelevant why newcomer chose its name (mens rea not an issue; evidence that confusion was wished does not constitute confusion)

Concurrence (LeBel): Board’s decision was reasonable

o Section 22(1): Dilution [of goodwill: a US term] / depreciating the value of the goodwill [Canada] Protects association and reputation

Trade-marks Act, s. 22(1): No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill…

Courts have struggled with this notion, because the language is nonsensical – how do you “depreciate” the value of goodwill?

Here, we’re moving away from the “pointer” idea to “goodwill” as a priority You can devalue the symbol, but you can’t “depreciate” the goodwill Until SCC got involved, the criterion was dilution of the distinctiveness of the mark (making the

“pointer function” of the symbol weaker: Pink Panther) We’re now moving more towards an American-style priority on reputation Usually, a company has a reputation within a particular industry – so you want to protect them

from their competitors within this industry; as long as there was no consumer confusion, the law didn’t care

Now that mega-brand-names have transcended particular fields, we’re more concerned with dilution only the big brand names can effectively use s. 22(1)

Somewhat contradictory that we’re willing to protect brands’ “spillover” into other fields, when we ask them initially to identify the fields in which they want protection

“Use” is still key Putting a mark on your website is not “use” Putting it on a poster, and then selling the poster, is more questionable

4 requirements Use of the mark, even if not competitive Mark sufficiently well-known so as significant goodwill Mark used in a way likely to have an effect on goodwill (can get a pre-emptive injunction) This use will likely disparage goodwill

Unclear what happens in the case of intentional dilution; unclear what happens if new product raises the value

The definition of “goodwill” is unclear; reliance on s. 22(1) is almost a last-ditch, desperate measure US courts tend to be pushing the importance of goodwill and reputation

Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824Facts: see aboveIssue: does BCL’s use of Cliquot depreciate the value of the goodwill attached to VCP’s name contrary to s. 22?Holding (Binnie, for the Court): no Boutiques Cliquot LtéeThis case is about “famous” TMs, which transcend a circumscribed field of wares, services, and businessesOnus is on VCP to prove likelihood of depreciation (blurring VCP’s powerful association with top-quality luxury goods)Section 22 does not require demonstration of likely confusion in same geographic area – just must show that association created in

consumers’ minds is likely to depreciate value of goodwill attached to VCP’s markHere, mental association of two marks does not necessarily give rise to likely depreciationDepreciation remedy sometimes seen as “super weapon” that must be checked to ensure fair competition; must be proven by

evidenceElements of s. 22 claim examined in turn belowUse of the mark: no defence that Cliquot is spelled differently; VCP must prove link between BCL’s display and VCP’s mark – here,

VCP’s claim failsProof of goodwill: not defined in Act; “good repute associated with a name or mark”; fame not required by s. 22, but degree of

recognition, volume of sales, extent/duration of advertising, and degree of distinctiveness are important – here, considerable goodwill attached to VCP’s mark

Linkage: a question of evidence – here, VCP’s claim fails of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Damage: value can be lowered in many ways; dilution differs from confusion because it creates a link in consumer’s minds between

one mark and a different good/service; must only prove likelihood, not actual depreciation – but here, VCP’s claim failsRatioElements of s. 22 claim: (1) claimant’s registered TM used by defendant in connection with goods/services; (2)

claimant’s registered TM sufficiently well known to have significant goodwill attached to it; (3) claimant’s mark used in manner likely to have effect on goodwill (i.e., linkage); (4) likely effect would be depreciation of value of goodwill (i.e., damage)

All of these are questions of evidence, not assertion“In other words, disparagement is a possible source of depreciation, but the value can be lowered in other ways, as

by the lesser distinctiveness that results when a mark is bandied about by different users.”

No exception in trade-mark law for public purposes, art, protest, etc. – it’s up to the court to decide; instead of a specific provision, courts tend to employ a fairly narrow definition of “use”

What are the exceptions to the right?Good faith use of personal name (e.g., Ronald Ebenezer McDonald can operate a hamburger restaurant under Ronald E. McDonald,

but not McDonalds)Resales: (national and international) exhaustion of trademark following initial transfer

Interaction with other IPIntersection of trade-marks and patent

o Reckitt: Should yellow, lemon-shaped bottles have been protected by a patent rather than by passing-off/trade-mark? (this is the general problem with distinguishing guises)

o Kirkbi: Can association between a shape and a brand created during period of patent exclusivity give rise to trade-mark?

Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65FactsKAG makes Lego, for which the patent on the locking system has now expiredRHI began manufacturing and selling similar bricksKAG now seeks protection of its unregistered trade mark, the “Lego indicia” (pattern of studs on top of the bricks) to prevent RHI

from marketing competing products without a disclaimer that they are not Lego action in passing offIssue: (1) Is Trade-marks Act s. 7(b) re: passing off ultra vires Parliament? (2) Can the “Lego indicia” form the basis of a trade-mark for a passing-off action under s. 7(b)?Holding (LeBel, for the Court): (1) No. (2) No. Ritvik Holdings Inc.1. ConstitutionalityRHI claims that s. 7(b) is not linked/connected to TM registration scheme in the ActPatents (s. 91(22)) and copyrights (s. 91(23)) explicitly allocated to Parliament, as is trade and commerce (s. 91(2))City National Leasing (1989): mere fact that provision codifies civil cause of action does not necessarily render it ultra vires

ParliamentAG Ontario v. AG Canada (1937): JCPC confirmed Parliament’s ability to enact TM legislationKitkatla Band v. BC (2002) set out test for whether impugned provision is in Parliament’s power to enact: (a) Does it intrude into

provincial head of power, and to what extent? (b) If it does, is it nevertheless part of a valid federal legislative scheme? (c) If yes, is it sufficiently integrated with that scheme?

a. IntrusionSection 7(b) codifies the CML tort of passing offAppears to encroach on provincial power – but (City National Leasing) it is remedial rather than creating a general cause of action;

its application is limited; and Parliament may create civil causes of action where measures are warrantedb. Validity of the ActAct establishes regulatory scheme for registered and unregistered TMs (primary difference: registration more rights)Protection of unregistered TMs integral to legitimacy, legal standards, and efficacy of registered TMsConcerned with TMs as a whole, rather than in one industryDid not intend to create two separate enforcement regimes for registered and unregistered marksc. Extent of integrationOnly minimally intrudes into provincial jurisdiction over P&CRFunctional relation of s. 7(b) to Act is apparent; passing-off action has a clear role without which there would be a gap in protectionSection 7(b) is thus within Parliament’s competence2. Passing-off actionPatent law protects new products/processes; exchanges time-limited monopoly on use/marketing for disclosure of the inventionTM law focuses on distinctiveness of marketing; goal is that consumers know what they are buying and from whomFoundation of a TM is distinctiveness, because only this allows identification; symbol of connection between source

and productKAG’s patent monopoly was essential for building up and preservation of Lego’s market share; many came to associate Lego with

the locking system of bricksKAG’s alleged distinguishing guise is a set of technical/functional characteristics formerly protected by its patentsRegistration of a TM is not to interfere with use of utilitarian features it may incorporateAct s. 13(2) recognises that it does not protect the utilitarian features of a distinguishing guiseKAG claims that the above is true of registered TMs, but not of unregistered TMs – but registration does not change the nature

of the mark; just grants more effective rights against third parties by facilitating proof of titleKAG claims that former Unfair Competition Act explicitly mentioned functionality, but Trade-marks Act does not, so omission was

intentional – but legislators did not mean to change their intentionRHI’s marketing operations are legitimate; KAG is essentially complaining about existence of competitionKAG’s alleged product distinctiveness consists precisely of process and techniques now common to the tradeRatio

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)“A purely functional design may not be the basis of a trade-mark, registered or unregistered”Elements of a successful passing-off action: (1) goodwill/reputation in respect of distinctiveness of product (not

techniques/processes that create the product); (2) misrepresentation (incl. negligent) creating confusion in the public; (3) proof of damages

Notes: How is this different from Linoleum?

Intersection of trade-marks and copyrighto Euro-Excellence: should copyright be used to protect the interests protected by trade-mark law when logo is a

work?o If both apply, which is more restrictive: Michelin/BCCA or Euro-Excellence?

Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37FactsKCI was exclusive licensed Canadian distributor of Côte d’Or and Toblerone bars; KCI is the owner in Canada of the trade-marks in

those names, but does not rely on this ownership for this caseEEI continued to import and to distribute the same bars, having acquired them legally in EuropeKCI’s parent companies registered the bars’ logos as copyrighted works in CanadaIssue: Can s. 27(2) of the Copyright Act, prohibiting parallel importation of copyrighted works, be used by KCI to prevent EEI from importing chocolate bars on the basis that the logos on the bars are copyrighted?Holding (Rothstein, 3-2-[1+3 concurring]): no Euro-Excellence Inc.Dreidger’s approach to statutory interpretation: “words of an Act are to be read in their entire context and in their grammatical and

ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”Bastarache’s approach is inconsistent with Dreidger; he substitutes his policy preferences for those of ParliamentBastarache distinguishes copyrighted works that are sold and works that are “merely incidental” to item being sold – but this is not

grounded in statute, and there is no clear test to decide which is whichBastarache introduces the notion of “legitimate economic interest”, which he misuses from Théberge and which should not be used

to read down the legislationWorks can receive concurrent copyright and TM protection under Copyright Act s. 64 – unlike Kirkbi, which separated TM and patent1. Purposive approach to the Copyright ActPrimary infringement would have been if EEI had produced copies of the logos; secondary infringement under ss. 27(2)(a)-(d)

requires actual primary infringement, but under s. 27(2)(e) requires only hypothetical infringementThis case is about applying Copyright Act s. 27(2)(e), under which KCI alleges secondary infringement – but KCI has not shown the

constitutive element of hypothetical infringement (i.e., that EEI imported works that would have infringed copyright if they had been made in Canada by the persons who made them)

Copyright Act does not permit exclusive licensees to sue the copyright owner-licensor for infringement of its own copyright no hypothetical infringement

Bastarache conflates exclusive licenses and assignments, which Parliament deliberately separated[Description of licenses, exclusive licenses, and assignments as described below]Exclusive license means (a) copyright owner permits another person to do something within the copyright; (b) licensor promises not

to give anyone else same permission for duration of license; (c) licensor itself promises not to do those acts that have been licensed to the licensee for the duration of the license

Parliament intended with s. 27(2)(e) to protect Canadian copyright holders even where they do not hold copyright abroad2. Application to the case: KCI cannot, as owners of Canadian copyright in the logos, infringe their own copyrightRatioNon-exclusive licensee does not enjoy property rights under CML; has only contractual rights on which it can sue;

cannot sue in trespassExclusive licensee has limited property interest allowing it to sue third parties for infringement, but not to sue the

owner-licensor (exclusive licensee’s property right does not defeat licensor’s retained ownership interest); owner-licensor is liable to exclusive licensee for breach of licensing agreement but not for copyright infringement

Assignee receives property interest from original owner and steps into shoes of owner with respect to the assigned rights; can sue others (including assignor) in trespass (s. 13(5))

Concurrence (Fish): need to be careful that KCI did not register its IP rights just to mount an attack on EEI; IP is not to be an instrument of trade controlConcurrence in the result (Bastarache)1. TheoryCopyright Act seeks to balance promoting public interest in disseminating work with just rewards for authorMust remember Binnie’s holding in Théberge limiting copyright protection to “legitimate economic interest” of copyright

holderCCH: copyright is limited by the notions of originality (“sweat of the brow” is an unacceptable standard because it does not

consider skill) and fair dealing (constitutive of the idea of the wrong in copyright law)So: copyright protection is limited to protection of legitimate economic interests resulting from an exercise of skill

and judgmentCopyright protection results from the action of an individual, but protection inheres in work, rather than in individual – so copyright

can be transferred or licensed (as can other IP rights)Kirkbi showed that coherent interpretation of statutes in pari materia prohibits using one kind of IP law to provide protection outside

its normal sphere of protection where the otherwise applicable law does notSection 27(2)(e) protects copyright holders from unauthorised importation of works resulting from their skill/judgment – not from

unauthorised importation of consumer goods on basis of their having a copyrighted work affixed to their wrapper, this work being merely incidental to their value as consumer goods (only legitimate economic interests are protected)

Copyright Act s. 27(2)(e) refers to importation into Canada for the purpose of doing anything referred to in ss. 27(2)(a)-(c)Section 27(2)(a) prohibits infringement of copyright through selling/renting – but selling a good with a copyrighted work attached as

a logo is not to sell that work; the role of the logo here is as TM, not copyrightSection 27(2)(b) prohibits distribution that affects the owner of the copyright – but protects the copyright holder only as author, not

as holder of a work incidental to the sale or distribution of a consumer good of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Section 27(2)(c) prohibits distribution, exposure, or exhibition – but protection is limited to where work itself is what is being

distributed/exposed/offeredSo: only when work itself is subject of sale/commercial dealing do ss. 27(2)(a)-(c) apply s. 27(2)(e) cannot apply hereDetermining when a work will be merely incidental will not be easy, but should consider nature of product, nature of protected work,

relationship of work to product; if a reasonable consumer undertaking a commercial transaction does not think that the copyrighted work is what she is buying or dealing with, that work is incidental

2. ApplicationProtected works in question are logos, and thus incidental to the bars EEI’s dealings with the bars are not caught by s. 27(2)(e)The logo services to identify the product’s origins, nothing more – it plays a role as TM, but not as copyrightDissent (Abella)1. Is copyrighted work being sold/distributed when printed on wrapper of consumer product?Agrees with Rothstein: nothing in Act restricts definition of “sell”; Act is indifferent as to whether sale of wrapper is important to

consumerBastarache’s approach (“incidental”) would introduce unnecessary uncertainty; once a work falls within s. 27(2)(a)-(c), no scope for

a judicially created limit based on “legitimate economic interest”2. Can exclusive licensee in Canada claim protection against secondary infringement when copyrighted work was produced by owner-licensor?Depends on how rights of exclusive licensees are definedCopyright owner is free to divest itself of any interest in the copyright, in whole or in part, by assignment or by licenseExclusive license under s. 13(7) is grant of proprietary interest in copyright itself, including a right to protect that interest as against

all others including the owner-licensorAs an exclusive license, the proprietary interest clearly extends to production and distribution of copyrighted works in CanadaExclusive licenses are distinct from assignment, as assignee enjoys complete control over what was assigned to itCopyright confers a limited monopoly to produce or reproduce the work in any material form whatsoeverKCI purchased exclusive license to the copyrighted work precisely because it wanted copyright on the logos

Michelin – Michelin & Cie v. CAW, [1997] 2 F.C. 306 (TD)FactsCAW attempted to unionise MM&C employees; distributed leaflets reproducing MM&C’s name and logoMM&C seeks damages on grounds that its IP rights were violated; wants permanent injunction to prevent CAWQ from using its

trademarks and copyrights in future organising drivesIssues: (1) Did CAW infringe MM&C’s trademark? (2) Did CAW violate MM&C’s copyright? (3) Is CAW’s use protected expression under Charter s. 2(b)?Holding (Teitelbaum): (1) No. (2) Yes. (3) No. Michelin – Michelin & Cie1. TrademarkNarrow question: whether Clairol holding is still validAct s. 19 (exclusive right to use of the mark) is limited to cases in which infringer uses a mark identical to registered mark for same

wares/servicesAct s. 20 (confusion) expands scope of s. 19 to cover infringement where infringer has not used a mark identical to registered mark;

“use” here means same as in ss. 19 (exact imitation) and 22 (depreciation of goodwill)Plaintiff must prove that infringer used the trademark as “trademark” and “use” are understood under ss. 2 and 4 of the ActUnions, whether considered as commercial or non-commercial, are explicitly included within class of persons subject to Trade-marks

Act; CAW uses the Act to protect its own trademarksCAW’s actions here do not fall under ambit of “use” of marks in association with wares/services under ss. 20 and 22 (no mistake

that CAW was originator of pamphlets and leaflets); no “advertising”; no likely association between CAW’s and MM&C’s use of the trademark

CAW is competing for hearts and minds of MM&C employees, not its customers no depreciation of goodwillNo trademark infringement2. CopyrightIssue is whether CAW has reproduced a “substantial part” of MM&C’s copyright, thus infringing MM&C rightsReproduction of a substantial part is a question of factCompetition in the marketplace is not at issueCAW reproduced a substantial part of MM&C’s logo; specifically designed materials to look like MM&C’s logoInsufficient mental effort and independent thought such that CAW’s work is entirely newCAW claims that parody is a form of “criticism” and thus qualifies for an exception – but parody and criticism are not synonymousCAW claims an exception under s. 27(2)(a.1) because its parody effectively mentions the source – but cannot judge cases on how

“good” the parody is at recalling the original, and CAW did not treat the work in a fair manner (otherwise parody would be the “last refuge of the scoundrel”

3. Constitutional issuesCAW claims that its posters/leaflets are protected expression under Charter s. 2(b) – but, despite broad understanding of freedom of

expression, private property cannot be appropriated in the service of freedom of expressionPeople have a limited right to use of public property as form for free expression, but private property is not thus available

(Committee for the Commonwealth)Balancing of interests takes place before and during s. 1 analysisNo right to use MM&C’s property, because MM&C has no corollary duty to give CAW access to this propertyUser of private property for expression must demonstrate that his use is compatible with function of the property before expression

is protected – but subjecting copyrighted work to ridicule as parody is not compatible with function of the copyrightSo: CAW ordered to refrain from using MM&C copyrighted worksRatio1. Trademark“[T]o use a mark as a trademark, the person who used the mark on the goods or in connection with the services must

have intended the marks to indicate the origin of the goods or services”

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Elements of proof (Clairol test): (1) use “in association” or in connection with goods/services (from s. 4); (2) use of

the mark as at trademark for the purpose of distinguishing or identifying defendant’s wares/services in connection with plaintiff’s wares/services (from s. 2)

“Use” has the same meaning in ss. 19, 20, and 22Test for “confusion” is not whether marks resemble each other, but rather whether average consumer in a hurry

would inter that they are both from same origin2. CopyrightTest for copyright infringement is reproduction of a substantial part of the plaintiff’s work; expenditure of mental

labour is not enough to escape charge of infringementParody does not qualify an infringing work for the criticism or mentioning-the-source exceptions“Whether the treatment of the original is in good faith is a question of degree and impression looking to the quality

and quantity of the original work used”

British Columbia Automobile Assn. v. O.P.E.I.U., Local 378, 2001 BCSC 156Facts1997: BCAA creates website1999: BCAA employees represented by OPEIU began strike action; OPEIU creates its own mimicking website1999: OPEIU altered website to be less like BCAA’s site (at www.bcaaonstrike and www.bcaabacktowork), with BCAA-related

metatags later reduced similarities and added a disclaimer later took websites offlineIssues: (1) Has OPEIU committed tort of passing-off? (2) Has OPEIU depreciated BCAA’s goodwill? (3) Has OPEIU infringed BCAA’s copyright?Holding (Sigurdson): (1) No. (2) No. (3) Yes.1. Passing-off2 categories of passing-off cases: where competitors are in similar fields and defendant’s naming/description/packaging of product

creates confusion; promotion of a good/service to suggest that it is somehow approved/authorised/endorsed by the plaintiff (“cashing in” on plaintiff’s goodwill)

(Describes components of successful passing-off action)BCAA says that OPEIU’s domain names and metatags constitute passing-off regardless of appearance(Discusses int’l jurisprudence)Ciba-Geigy (SCC, 1992): standard is that of an ordinary average consumerHere, no passing off: no misrepresentation or pretended endorsement/connection, no confusion or possibility of confusion (domain

name and metatags not identical, no competition, legitimate reasons to use domain names and metatags, reasonable way for OPEIU to bring its message to the public)

When website is used for labour relations dispute, must balance protection of party’s IP with Union’s right of expressionWith disclaimer, no possibility of confusion – and no evidence of confusionEarly union sites might have confused a consumer in a hurry, but newer sites do not constitute passing-off2. Trademark and goodwillNot disputed that BCAA and its logos are validly registered trademarksOPEIU claims that there is a requirement for a commercial element to allegedly infringing conduct – accepted, as Union has non-

commercial status, and s not trying to sell goods/services but rather to achieve Union’s objectivesOPEIU claims that Act s. 22 does not apply to Union websites – accepted hereOPEIU claims that BCAA has shown no depreciation of goodwill – but test is likely depreciation, not depreciation itself (though no

problem here)Any depreciation of goodwill was not brought about by manner of use of the mark, but rather if OPEIU is successful in

its arguments in support of its members3. CopyrightBCAA’s copyright in its website includes look, layout, and apparent operationOPEIU copied substantial portions of BCAA’s first site, even given inevitable similarities between websitesOPEIU claims that it was creating a virtual picket-line – but there was no criticism, so no fair dealing4. DamagesNo actual pecuniary loss proven – but damages should not be avoided just because they’re hard to calculateCopyright owner need not prove damages to enforce its right; damages for passing-off are presumedBCAA thus awarded nominal damagesNo declaration/injunction granted here, because OPEIU has already taken websites offlineRatio1. Passing-offSuccessful action depends on pretended endorsement/connection, or (possibility of) confusionLegitimate reasons or reasonable means can justify defendant’s use2. Depreciation of goodwillSuccessful action requires (1) proof of valid trademark, (2) use of the mark; (3) likely depreciation of goodwillNon-commercial provision of information is not a service as contemplated by s. 4 of the Trade-mark ActIf mark is used to stress differences, rather than similarities, no depreciation of goodwill3. CopyrightSuccessful action requires plaintiff to show (1) original work, and (2) copying of a (3) substantial portionIssue of whether there has been substantial copying is a question of quality, not quantity; overall arrangement of

components is important; court must exclude portions not subject to copyright

b. CopyrightAs we become a much more digital society obsessed with recording, just about everything we do will be captured by copyright,

making everything that everyone else does an infringementCopyright laws were drafted for a previous time and different placeCanada is currently going through an odd form of copyright reform (watch news)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Canada hasn’t implemented a lot of WIPO treaties, though US has been pressuring Canada to implement for many years

o In that sense, Canada is a renegade – but Canada is actually quite conservative in protectiono US has labelled Canada as a haven of piracyo Harper in process of instructing Minister of Industry to enact copyright reform in Canadao Odd process of reform: no consultation/process; no one really knows what’s going on/when/whyo Community groups have gotten involved and are demonstrating (want the process open and want consultation);

concern that we’re just doing what US wantsPiper: plagiarism is a norm (not illegal)Do NOT confuse having/getting an IP right with infringing someone else’s right

o If my work is original, I can get a copyright – but this does not mean I’m not infringing someone else’s copyrighto An IP right is a right to exclude, a negative right – it does not allow you to do anythingo In CML property, the object is unimportant; instead, it’s a question of relationships between rights holder and other

peopleo The moment I do something original and it’s fixed, I get a copyright – but I may do that original thing using

someone else’s original (copyrighted) idea I can veto his publishing my work, and he can veto me publishing hiso If we each write one sentence in a story, we each have the right to block any one amongst us from publishing the

whole thing – although we can each publish our individual sentenceWe begin from a position of liberty; we do things not because we have a right, but because no one can stop usIf I write a 20-page original article in which I include a 5-page quotation from your book

o I have a copyright in my articleo You maintain your copyright in your booko When I try to publish my article, you can stop me – so no one can publish those 20 pages

So: violating a copyright does not mean that you won’t get a copyright – it just means you might get suedDo not get fixed on the notion of “use”, which is a CVL concept

o “Use” suggests a right in a thing, when in fact property rights (CML acknowledges this openly) are between peopleo The CML arose through debates between persons, not pre-existing legal constructs

Joint authorso Each has the right to exclude the whole world, but not each othero If sentences in a work are written together by two authors, neither can exclude the other from publishingo If two people write a song together, neither can sell the song to Sony without the other’s consent – because each

has a right not against each other but against the rest of the worldo However, either could assign his right to someone else (even Sony…)

Copyright in CML and CVLo “Copyright” in French is “droit d’auteur”, which means something very differento Copyright originated in UK (Statute of Anne) as a means to protect UK stationers from importation of Continental

books after the guild system fell aparto Arguments followed for ~60 years about whether there was only a statutory right or also an underlying CML right

courts decided in Beckett that only the statute governed, and was a time-limited, purely commercial right still seen thusly today

o Meanwhile, the notion of droit d’auteur continued to develop on the Continent, protecting the connection between the author and his/her expression; a broader right

o Canadian act, representing both systems, is a hybrid – though it’s primarily about copyright (says Binnie in Théberge), and the moral rights are stuck in the middle

What is included?Copyright provides the right to exclude others from doing certain things (ss. 3(1) and 27(1) Copyright Act) with respect to works

(not an affirmative right to use)o Producing or reproducing work (hanging something in your living room that you privately printed is technically an

infringement, but no one cares – also see fair dealing)o Performing work in publico Publishing worko Engaging in or authorizing above acts

Copyright Act, s. 3(1): For the purposes of this Act, “copyright”, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right

(a) to produce, reproduce, perform or publish any translation of the work,(b) in the case of a dramatic work, to convert it into a novel or other non-dramatic work,(c) in the case of a novel or other non-dramatic work, or of an artistic work, to convert it into a dramatic work, by way of

performance in public or otherwise,(d) in the case of a literary, dramatic or musical work, to make any sound recording, cinematograph film or other contrivance by

means of which the work may be mechanically reproduced or performed,(e) in the case of any literary, dramatic, musical or artistic work, to reproduce, adapt and publicly present the work as a

cinematographic work,(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication,(g) to present at a public exhibition, for a purpose other than sale or hire, an artistic work created after June 7, 1988, other than a

map, chart or plan,(h) in the case of a computer program that can be reproduced in the ordinary course of its use, other than by a reproduction

during its execution in conjunction with a machine, device or computer, to rent out the computer program, and(i) in the case of a musical work, to rent out a sound recording in which the work is embodied,

and to authorize any such acts.Copyright Act, s. 27(1): It is an infringement of copyright for any person to do, without the consent of the owner of the copyright, anything that by this Act only the owner of the copyright has the right to do.

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Main questions: What is a work? When have you copied it?Works are ideas, not expressions

o Expression of content vs. content itselfo Which activities can you prevent?o Which activities do you think a patent would prevent? A trademark?

Types of work protectedo Literary works (term of art: refers to use of words rather than to literature)

Copyright Act, s. 2: In this Act … “literary work” includes tables, computer programs, and compilations of literary works

Possible, but difficult, to protect characters (substantial protection in the US for characters as expressions) Titles

“Work” includes the title thereof when such title is original and distinctive (s. 2 of the Copyright Act)

2 ways to protect titles:o As part of overall worko When original and distinctive, as separate work (extremely difficult…)

Important because a title is how a work is identified large number of disputes centre on this On the border between trade-mark and copyright (overlap)

o Artistic works

Copyright Act, s. 2: In this Act … “artistic work” includes paintings, drawings, maps, charts, plans, photographs, engravings, sculptures, works of artistic craftsmanship, architectural works, and compilations of artistic works

Photos are hugely controversial, given margin of creativity and free culture movement Maps: historical aspect (was an art) Must work be “artistic”?

Word “artistic” identifies phrase “artistic work” and used to qualify “artistic craftsmanship” Does the use of the word “artistic” in the phrase import any requirements of artistic-ness on the

object?o Dramatic works

Copyright Act, s. 2: In this Act … “dramatic work” includes(a) any piece for recitation, choreographic work or mime, the scenic arrangement or acting form of which is fixed in writing or

otherwise (b) any cinematographic work; and(c) any compilation of dramatic works.

How do you know when you’ve copied? What is a dramatic work? Fixation of dramatic work [so, for example, an improv skit or an improvised piece of jazz is never fixed] Bias towards countries with the technology to reproduce work; what do you do with oral cultures that

never record/write/store?o Musical works

Copyright Act, s. 2: In this Act … “musical work” includes any work of music or musical composition, with or without words, and includes any compilation thereof

E.g., John Cage’s 4’33” of silence: estate tried to sue subsequent musician who created a work with 2 minutes of silence (settled, so no judgment)

Can have a single copyright in combined music and lyrics to a song What are the various parts of a musical work (melody, harmonic structure, rhythm, hook)?

o Computer programs (hugely controversial)

Copyright Act, s. 2: In this Act … “computer program” means a set of instructions or statements, expressed, fixed, embodied or stored in any manner, that is to be used directly or indirectly in a computer in order to bring about a specific result includes any work of music or musical composition, with or without words, and includes any compilation thereof

o Compilations and databases

Copyright Act, s. 2: In this Act … “compilation” means(a) a work resulting from the selection or arrangement of literary, dramatic, musical or artistic works or parts thereof; or (b) a work resulting from the selection or arrangement of data

How creative must it be? See Feist below; see also Tele-Direct, CCH Think about selection/arrangement when it comes to legal databases (i.e., Keycite helps Westlaw

set itself apart from publically available databases) Problem is that databases are depositories of facts

What are the criteria for protection?Fixation (as opposed to corporeality)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Work must be fixedo But work need not be physical – must pass through a tangible form (e.g., for a dramatic work, not every element

must be written down; rather, at some point what is going on must be written down or photographed or something)o Why must a work be fixed?

Evidentiary reasons: need to be able to show something to the court Need to protect work without impinging future creativity in similar domains (though this criterion is

awkward given that, for example in case of plays, your protection could depend on whether someone happened to be there at the time with a video camera)

In regard to dramatic work, protection of a “sequence of events” could lend protection to any series of acts done by any person at any time

o This criterion applies to all work (courts have read this in), even though it’s only explicit with regard to dramatic work

o Fixation is not a characteristic of the work itself, but a procedural step; any one work could be fixed or not fixedOriginality

o “What is worth copying is prima facie worth protecting” (University of London Press)

University of London Press, Ltd. v. University Tutorial Press, Ltd. (1916), 2 Ch. 601Facts1915: University of London passes resolution that examiners are appointed on condition that their copyright in examination papers is

vested in the University1916: 2 math examiners hired to prepare particular examination papersUniversity assigned to ULP copyright in the papers in question; ULP published these papersNext month, UTP published a series of exam papers (as studying aids) given to them by students, amongst which were several ULP

papersULP commenced action against UTP for infringement of copyright; two examiners in question were joined as co-plaintiffsULP claims that University had good title to copyright because examiners were employed by University and on notice of copyright

transfer; examination papers were “original literary work” and thus copyrightableUTP claims that ULP has no copyright because examiners were not under K of service (no master-servant relationship), examiners

themselves have copyright because papers are not literary work, and even if they are this is fair dealing for private studyIssues: (1) Are the exam papers subject to copyright as (a) literary works that are (b) original? (2) In whom did copyright vest? (3) Has UTP infringed the copyright?Holding (Peterson): (1) Yes. (2) Examiners. (3) Yes.1. Original literary works“Literary work” covers printed/written work irrespective of quality or style examination papers are includedPapers originated from examiners originalUTP claims that papers drew on common mathematical knowledge and didn’t spend long on them – but this is not a test, and

creating papers involved judgment and expertiseUTP claims that papers were of a common type – but they still originated with the examiners2. VestingExaminers were employed by University, and papers were prepared during employment“K of service” is impossible to define – but examiners were not on staff, were not servants no K of serviceAuthor is first owner of copyright, and assignment must be in writing: examiners did not assign in writing, though they were obliged

to assign it to the University University has equitable titleAbsent legal assignment, University cannot sue; only examiners can sue, and in this case the two examiners can only sue for their

own papers, not those prepared by other examiners3. InfringementThis is not fair dealing; no “private study” here no protectionSo: plaintiffs succeed as regards the two examiners’ papers, but not othersRatioRequired originality relates to expression of the thought originating from the author, rather than novelty (i.e., not

“originality” as commonly understood)A work can be original even if it draws on common knowledge or is of a common type

o Traditional view: must be original in sense that the work originated with the author (“originality” here does not reference uniqueness) – see Nichols below

Remakes of “Romeo and Juliet” are not original, in that they copy someone else’s work But the added elements can be copyrighted If you can prove that you didn’t copy the work (e.g., if monkeys wrote Shakespeare), then you aren’t

infringing copyright, as you have independently created it; the chances of this are rare with painting, but more common with computer programs

o Feist and progeny: a higher standard for originality, at least with respect to compilations In Feist, court held that there was nothing original about creating a phone book If you took the traditional view, the phone book was indeed an original literary work But courts now concerned that the standard was getting too easy to meet, because there are mechanical

ways of building phone books and other databases based on facts So: work must originate with you, but must also have a spark of creativity, a creative element

“Original” in the more colloquial sense Though the spark can be very, very slight – e.g., colour-coding by gender, selecting only

some of the pieces of information (e.g., restaurants in Old Montreal instead of all restaurants in Montreal), etc.

This criterion applies most obviously to databaseso Unlike fixation, a criterion inherent to the work itself

Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340 (1991) of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)FactsRTSCI publishes (as condition of its monopoly franchise) a typical telephone directory, which it distributes free of chargeFPI specialises in area-wide telephone directories, which it distributes free of chargeFPI and RTSCI compete for yellow-pages advertisingFPI approached each of the 11 telephone companies operating in northwest KS and offered to pay for the right to use their white

pages listings to make an area-wide directory – only RTSCI refused (this refusal later found to be an unlawful attempt to extend a monopoly)

FPI used RTSCI’s white pages listings without consent; RTSCI sued for copyright infringementIssue: did FPI infringe RTSCI’s copyright in its white pages?Holding (O’Connor, for the Court): no Feist Publications, Inc.Interaction of two propositions: facts are not copyrightable; compilations of facts areSine qua non of copyright is originality – meaning that the work was independently created by the author (rather than being copied

from other works) and that it possesses at least minimal creativity (low level)Originality does not signify noveltyMere fact that a work is copyrighted does not mean that every element may be protected copyright extends only to

those components that are original to the authorWhere compilation author adds no written expression but just compiles facts, expressive element is elusive; if selection and

arrangement are original they may be protected, but facts themselves do not become original through associationSubsequent compiler is free to use facts contained in another’s publication to aid in preparing a competing work, as long as

competing work does not feature same selection/arrangement“Sweat of the brow” theory (copyright rewards hard work) must be rejected, as it extends copyright to the facts

themselves – instead the criterion is originalityCopyright Act of 1976 requires three elements of a copyrightable compilation: (1) collection and assembly of pre-existing material,

facts, or data; (2) selection, coordination, or arrangement of those materials; (3) creation, coordination, or arrangement of an “original” work of authorship

Statute envisions that some compilations will not be sufficiently original to trigger protection (though originality requirement is not stringent)

RTSCI’s whole directory is subject to valid copyright because it has some original material – but RTSCI did not prove that FPI had copied these original elements

RTSCI’s selection/arrangement of facts was so mechanical and routine as to require no creativity whatsoeverRTSCI also did not select to publish the names, but was required to do so as part of its monopoly franchise arguable that state law

dictated selectionRatioFacts, alone or compiled, are not original and cannot be copyrightedFactual compilation is eligible for copyright if it features an original selection or arrangement of facts, but copyright

is limited to the particular selection or arrangement – does not extend to the factsOriginality (low threshold), not sweat of the brow, justifies copyrightEstablishing infringement requires (1) ownership of valid copyright and (2) copying of constituent elements of the

work that are original

CCH Canadian Ltd. V. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339FactsLSUC maintains and operates Great Library at Osgoode Hall, where it provides request-based photocopy service for members as well

as self-service photocopiers (which have copyright warnings posted above them)CCHCL (publishers) seek copyright infringement actions, arguing that LSUC infringes copyright in photocopying works and seeking a

permanent injunctionIssue: (1) Are CCHCL’s materials “original works” protected by copyright? (2) Did LSUC authorise copyright infringement by maintaining self-service photocopiers and copies of CCHCL’s works for its patrons use? (3) Did the LSUC’s fax transmissions of CCHCL’s works (to its members, as part of the request-based photocopy service) constitute communications “to the public” within the meaning of Copyright Act s. 3(1)(f)?Holding (McLachlin, for the Court): (1) Yes. (2) No. (3) No. Law Society of Upper CanadaIssue: 1. OriginalityAuthor has no copyright in ideas, but only in his expression of them“Originality” can be seen as “sweat of the brow” (Feist) or creativity – but correct position is between the twoSkill and judgment are the criteria – but must not be so trivial that “creation” is a purely mechanical exerciseCML countries have tended to reward labour, even absent true artistic or intellectual creation; CVL countries have required more

than mere industriousness Canada will choose “skill and judgment”Feist is not directly transferable to Canada, and Canada should not go as far in requiring at least minimal creativityThis criterion safeguards against overcompensating authors for their workHeadnotes (more than simple abridgement), case summaries (likewise), compilations of judicial decisions (change the form of

decisions, arrangement requires skill – though decisions themselves cannot be subject to CCHCL’s copyright) are all the products of exercise of skill and judgment

2. AuthorisationMere provision of photocopiers did not amount to authorisation: no evidence was tendered showing that photocopiers had been used

in an infringing manner; posting a notice about copyright is not acknowledging that machines will be used illegally3. FaxingFax transmission of a single copy to a single individual is not a communication to the publicIf necessary, would have concluded that LSUC qualified for library exemptionRatioAn “original” work under the Copyright Act originates from an author and is not copied from another work – but must

also be the product of an author’s exercise of skill and judgmentExercise of skill and judgment must not be so trivial as to be a purely mechanical exerciseCreativity is not required to make a work “original”

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What is the scope of the right?What amounts to infringement?

o Reproduction (the “copyright” part of the act, addressing production and publishing) Literal reproduction

Copyright Act, s. 3(1): … “copyright” … means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever

Gold: written as a positive right, but actually is a negative right Non-literal reproduction

Copyright holder can prevent not only literal copying, but non-literal copying as well Cf. consumer confusion test in trade-mark law Degree of similarity between works is key but hard to measure (“Nobody has ever been able to fix

that boundary, and nobody ever can”: Learned Hand in Nichols) E.g., translation counts as a copy – but as you get more abstract it becomes more difficult

Nichols v. Universal Pictures Corporation, 45 F.2d 119 (1930)Facts: N wrote a play; UPC produced a movie that N alleges is too similar to N’s playIssue: did UPC reproduce N’s play?Holding (Learned Hand): no Universal Pictures CorporationCopyright cannot be limited literally to the text, or immaterial adjustments would escape consequenceQuestion is whether part taken is “substantial” and thus not a “fair use” of the copyrighted workWhen plagiarist takes an abstract of the whole, rather than a block, it is difficult to assess: “Nobody has ever been able to fix

that boundary, and nobody ever can”UPC took no more (if it took anything at all) than the law allowedN may have discovered this “vein” of story, but cannot keep it to herself; her characters are stock charactersEven assuming that N’s play was original, copyright does not cover everything that might be drawn from the playRatio: a judgment call whether non-literal reproduction is too similar to the original

Gilliam v. American Broadcasting Companies, 538 F.2d 14 (1976)Facts1973: Time-Life acquires right to distribute certain BBC TV programs (incl. Monty Python) in US; permitted to edit only to insert

commercials, censorship, or government rulesBBC signs a distribution agreement with ABC also, with no similar restrictions (though it did permit limited editing); BBC and MP

assume that ABC would broadcast each MP program in its entirety1975: ABC broadcasts first MP special, omitting 24 of the 90 minutesIssue: did ABC violate G’s (i.e., MP’s) copyright by impairing the integrity of the original work?Holding (Lumbard): yes GilliamDamage to MP’s reputation from broadcasting edited versions could be irreparable, imperilling ability to attract large audiencesABC could be injured by an injunction, but this injury is more speculative MP’s rights prevailMP had copyright in the script copyright is possible in the recorded program, though BBC’s ownership of it doesn’t affect MP’s of

copyright in the scriptCopyright in script survives incorporation into derivative work user of the script (even with permission of derivative work’s

proprietor) may infringe underlying copyrightInfringement applies to truncation, insofar as it addresses ability of copyright holder to control workBBC was not entitled to make unilateral changes to the script, and was not specifically empowered to alter recordings once made,

and MP reserved any rights not granted to BBC BBC may not convey greater rights than it owns BBC’s permission to ABC to edit is a nullity

MP and BBC did not consider themselves joint authors of a single workABC claims that its K with BBC permits editing, and that MP cannot affect content post-recording – but omission of terms about

alteration must be read as reserving to MP exclusive authority for such revisionsABC claims that MP should have anticipated that most excised material was inappropriate for US audience – but there was no

implied consent to edit (in fact, MP repeatedly sought assurances of non-editing), and no previous US broadcasts of MP materials to establish precedent

Copyright law recognises the important role of the artist in societyLikely that MP could in full trial succeed in proving infringement – though this does not mean that any editing would constitute

infringementRatioCopyright in one work survives incorporation into a derivative work user of the derivative work (even with

permission of derivative work’s proprietor) may infringe underlying copyrightOne who receives permission to use copyrighted work in production of derivative work may not exceed specific

purpose for which it was granted

Substantial copying

Copyright Act, s. 3(1): … “copyright” … means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever

Quantitative bases are relatively easy to assess – but even if portion copied is quantitatively small, may be qualitatively significant

Must assess work as a whole and determine importance of elements that are similar (certain elements are truly emblematic; others are fairly generic)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) Use of stock elements does not contribute to copying

Assignment Copyright can be assigned Employer is deemed to be the owner of the copyright in work done by employees on the job (but

what constitutes “on the job”?) License

Copyright can be licensed (a promise not to assert your right against someone else) Non-exclusive license: this promise is made to many people Sole license: promise not to sue one person, and not to license anybody else Exclusive license: promise not to sue one person, not to license anybody else, and not to use it

yourself

Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. U.S., 125 S.Ct. 2764 2005FactsGLUS distributes free software products allowing peer-to-peer network-based sharing of electronic filesIndividual recipients of GLUC’s software have shared copyrighted must and video files without authorisationDisputed figure: may be as high as 90% of all GLUC transfers that are of copyrighted files (“staggering” scope of probable

infringement)GLUC does not mediate the file transfer or intercept any transfersGLUC has clearly voiced the objective that recipients use its software to download copyrighted work, and took active steps to

encourage infringement – including promotional materials – to increase advertising revenueIssue: can GLUC be sued for its users’ copyright infringements?Holding (Souter, for the Court): yes Metro-Goldwyn Mayer Studios Inc.When widely shared service is used to commit infringement, may be impossible to enforce rights against all direct

infringers only practical alternative is to go after distributor of copying device for secondary liability based in contributory (intentional inducement or encouragement of direct infringement) or vicarious (profiting from direct infringement while declining to exercise a right to stop/limit it) infringement

Sony (when VCRs first came out) held that devices capable of “commercially significant non-infringing uses” could not be faulted (i.e., most people used VCRs to “time-shift” their watching of programs); reflected patent law’s doctrine that distribution of a component of a patented device will not violate the patent if it is suitable for use in other ways

Where an article is “good for nothing else” but infringement, no legitimate public interest in its unlicensed availability no injustice in presuming or imputing an intent to infringe

Sony does not require courts to ignore evidence of intent if there is such evidence – and where evidence shows actions designed to promote infringement, Sony will not preclude liability

Evidence of active steps to encourage direct infringement show an affirmative intent that the product be used to infringe overcomes law’s reluctance to find liability when defendant just sells a commercial product suitable for some lawful use

Mere knowledge of infringing potential or of actual infringing uses would not be enough here to ground liability; nor would ordinary acts incident to product distribution – inducement rule (below) instead premises liability on purposeful, culpable expression and conduct does not compromise legitimate commerce or discourage innovation

GLUC acted with purpose to cause copyright violations: sought to satisfy known source of demand for copyright infringement (Napster’s old customers); did not attempt to develop filtering tools to diminish infringing activity; revenues depend on high-volume use, and most volume was infringing

RatioOne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression

or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties

Infringement theory requires evidence of actual infringement

o Moral rights

Copyright Act, s. 14.1(1): The author of a work has … the right to the integrity of the work and, in connection with an act mentioned in section 3, the right, where reasonable in the circumstances, to be associated with the work as its author by name or under a pseudonym and the right to remain anonymous.

Challenges of new technologies Significance of the term of the right Attribution

Copyright Act, s. 14.1(1): The author of a work has … the right to … to be associated with the work as its author by name or under a pseudonym and the right to remain anonymous.

How is this right exercised?o When copyright in a work is sold, but the author wants to retain some degree of

“ownership”o Difficult to imagine how this right is integrated into the greater scheme of rights

Integrity

Copyright Act, s. 14.1(1): The author of a work has … the right to the integrity of the … workCopyright Act, s. 28.2(1): The author’s right to the integrity of a work is infringed only if the work is, to the prejudice of the honour or reputation of the author,

(a) distorted, mutilated or otherwise modified; or(b) used in association with a product, service, cause or institution.

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) Subjective offence of the author is not used, as this could limit possibility of criticism Objective test (would the reasonable person be prejudiced – not whether they feel bad, but

whether their reputation has been noticeably damaged) is used Violation of moral rights is therefore difficult to prove E.g., Michael Snow was able to stop Eaton’s Centre from putting ribbons around the necks of the

geese in his sculpture there Does the right extend to a copy of the work?

o E.g., photographing a painting and then putting a moustache on the photographo What about works that only exist in copied form (e.g., books, films)?

Deemed prejudice

Copyright Act, s. 28.2(2): In the case of a painting, sculpture or engraving, the prejudice referred to in subsection (1) shall be deemed to have occurred as a result of any distortion, mutilation or other modification of the work.

Why single out painting, sculpture and engraving? Changing words is perhaps more common (e.g., in the editing process) Likely entrenched at a time when those forms of art were considered particularly valuable and

expressive On an exam, always ask “what is the work in question”? Can you destroy a piece of art that you own?

Prejudice to honour or reputation – this section is reproduced in the notes above How do we apply this test to works that are not paintings, sculptures, or engravings? Must distortion, mutilation, modification, or association be objectively prejudicial? Does test depend on why we protect moral rights? Or must it be only subjectively prejudicial?

Waiver

Copyright Act, s. 14.1(2): Moral rights may not be assigned [or licensed] but may be waived in whole or in part.

So: can sell the copyright, but still have to waive moral rights explicitly (this waiver becomes a functional asset in itself, as it can be made to “follow” the copyright)

Gold: this makes no difference to anybody but lawyers Can the holder waive her moral right in a work before the work is created?

o Unclear whether you can waive a right that you don’t yet haveo Makes good commercial, but no theoretical, senseo People get around this by encouraging people to waive their rights once their work is

complete

Copyright Act, s. 14.1(4): Where a waiver of any moral right is made in favour of an owner or a licensee of copyright, it may be invoked by any person authorized by the owner or licensee to use the work, unless there is an indication to the contrary in the waiver.

Moral rights are associated with each individual, discrete work, rather than with a body of work – this works well with the original notion of IP laws as applying to books, but less well with other works that exist in versions (computer programs), various copies (paintings and prints), etc.; the response is to have people sign all sorts of agreements, to “cover all the bases”

The nature of moral right comparison in Canadian copyright law pales in comparison to European laws, as we have diluted moral rights by burying them amongst, and making them comply with, copyright

[Binnie has been the main SCC justice to write on IP]

Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336FactsT (painter) produced a painting, and licensed a company to produce 10K posters of itGAPC transferred authorized poster reproductions, purchased from a licensed company, from a paper substrate to a canvas one for

purposes of resaleResultant canvases looked much like original painting (because T’s style is so flat)T arranged to have the canvas-backed images seized before judgmentSeizure before trial is not a remedy available in an action based on breach of moral rights, so before lawfulness of seizure can be

decided, must be determined whether T’s copyright was breachedIssue: did GAPC “copy” T’s work?Holding (Binnie, 4-3): no Galerie d’Art du Petit Champlain inc.T satisfies statutory requirements for copyrightGonthier gives too little scope to purchaser (GAPC), and excessive rights to artist (T)Canadian copyright law has traditionally been more concerned with economic than with moral rights; works seen as articles of

commerce; rights can be bought and soldOnly economic rights that T can assert are those that he retains after licensing the poster producers, under Copyright Act s. 3(1)Moral rights (CVL) see the oeuvre as an extension of the artist’s personality; Copyright Act protects them insofar as infringement is

“to the prejudice of the honour or reputation of the author”T framed his complaint more in terms of his moral rights than his copyright; he wishes to stop GAPC from catering to the market for

canvas-backed reproduction – but economic rights cannot be read so broadly as to cover same ground as moral rights [so Binnie explicitly reserves the question of moral rights for another day]

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Copyright comes into being when work is fixated; Gonthier wants fixation to extend to physical composition of the work embodied in

copyrighted expression, so that substitution or one backing for another constitutes “reproduction” – but this doesn’t adequately recognise the rights of the GAPC in the physical posters that they purchased, and blurs economic/moral distinction

Copyright Act seeks to balance public interest in encouragement/dissemination of works with creator’s just rewardOnce authorised copy of work is sold to a member of the public, it is for the purchaser to determine what happens to it (in terms of

copyright)Difficult to envisage any intellectual content let alone IP in the blank piece of paper peeled awayHere – no reproduction, which is production of new or additional copies in any material formAct recognises more than just physical, mechanical reproduction (concept has broadened with time and tech) – but that’s what’s at

stake hereCourts have not given independent meaning to “produce” as distinguished from “reproduce” in Act s. 3(1)US legislation incorporates definition of “derivative work” – but in the method at stake here, there is no derivation, no reproduction,

no production of a new and original workEven if new substrate is a “fixation”, the original lives on and has not been multipliedLayer of ink rests intact not even reproduction “in substantial part”Change in substrate could be seen as a change in physical structure, but that alone does not constitute a moral rights violationUnhelpful that “copyright” and “droit d’auteur” are mixed in the English and French titles of the ActCVL tradition of “droit de destination” gives author the right to control the use that is made of authorised copies of his work – but

this does not exist in the Copyright Act, and the only control over use of authorised copies is exerted through economic rightsT is asserting a moral right in the guise of an economic right rejectedRatio“Reproduction” is the making of an additional copy, although Act recognises more than just physical, mechanical

reproduction (concept has broadened with time and tech)Modification of a work by the purchaser, which does not “prejudice … the honour or reputation of the author” was

intended by Parliament to be within the purchaser’s rightsAct clearly separates economic from moral rights; Parliament intended modification without reproduction to be part

of the moral right sectionDissent (Gonthier, for all the QC justices)1. CopyrightCopyright enables owner to prevent unauthorised plagiarism and distribution of an original work; a sui generis schemeCopyright purpose is not to protect ideas/opinions, but rather the means and forms by which ideas are communicated (i.e., formal

expression)Canadian copyright law draws on multiple sources, including CML and CVL traditionsCopyright and moral rights are completely different in terms of definition and scope: copyright protects against unlawful

appropriation and distribution (assignable, licensable patrimonial right); moral rights are concerned with protecting integrity and paternity of the work (extra-patrimonial, non-assignable rights)

This case is ruled solely by copyright; moral rights are inapplicable hereKey factor is the work including material support, and not the idea expressed by the workOutcome of this case depends entirely on determination of the question of infringementFor a copy to be infringing, it must have an unlawful aspect; infringement can arise from copies “made” or “dealt with” in

contravention of the Act (s. 2), and must be of a type defined in s. 3 (not simply a violation of moral rights) regardless of any other concurrent wrongful act (incl. violation of moral rights)

Right to recover possession of infringing copies is given to the owner of the copyright and not to the author himselfGAPC unlawfully reproduced T’s works in a material form in breach of Act s. 32. Application of Act s. 3(1)“Sole right to produce or reproduce”: reproduction is more than multiplication; need not establish increase in total number of copies;

primary purpose of s. 3(1) is to enable author to profit from work, and it has been written broadly to grow with timeReproduction of a “substantial part”: consider qualitative and quantitative aspectsReproduction “in any material form whatever”: “work” refers to any materialised, original form of expression (physical outcome);

“producing” is initial materialisation and “reproducing” is any subsequent, non-original material fixation; what we must count is not total number of copies but number of materialisations

Irrelevant that consequence of one materialisation destroys anotherAnalysis is the same whether reproduction is made from original work or copyMust distinguish medium (copyright: s. 3) from “structure” (moral right: s. 28)In the case of a painting, infringement will occur when the painting as a whole or any substantial part thereof is

reproduced in any material form whateverT never intended to assign in full his right to reproduce the works in question in any material form whatever; only right he assigned

was the right to reproduce his works on paper, thus excluding reproduction in any other material formGAPC reproduced T’s work or a substantial part thereof in any material form whatever contrary to Act s. 3(1), and because T did not

consent his copyright was infringedNotesThis case was an opportunity for the Court to integrate CML and CVL concepts (because moral rights were not at issue) – but Binnie

framed the question such that moral rights were not at issue the question of the scope of moral rights was reservedQuestion was whether court should pay attention to the attachment of an author to his/her workAuthor should be, according to CVL thinking, able to control the use of his/her work – so reproduction should mean “reconstitution”:

this is what the 3 QC judges all advocated for, arguing that even the economically based copyright laws should consider civilian notions too; QC judges also argued that the law prohibits “production” as well as “reproduction”, so “production” includes fixing a work in a medium

CML judges, led by Binnie, held that it was an economic right at stake, a right to make copies (and no more); otherwise we’re overprotecting the artist, and permitting him/her to control what happens to his/her work once it’s in the public domain (would T be able to stop people from cutting up the posters? from putting them in ugly frames?); T had his chance to realize an economic return, and should not be permitted through copyright law to exercise further protection; further control would impede future generations’ access to the work

Gold: this decision represents the ghettoisation of civilian thinking within copyright (which is why we can now describe copyright without referencing CVL)

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Gilliam v. American Broadcasting Companies, 538 F.2d 14 (1976)Facts: as aboveIssue: did ABC violate G’s (i.e., MP’s) moral rights by impairing the integrity of the original work?Holding (Lumbard): yes GilliamMP asserts moral rights in its workUS copyright law does not recognise moral rights – but economic incentives behind copyright law cannot be reconciled with inability

of artists to obtain relief for mutilation or misrepresentation of their workWriter/performer, not network, suffers consequences of mutilationEdited version broadcast by ABC impaired integrity of MP’s work and misrepresented MP’s talents to US audience injunctionRatio: courts have long granted relief for misrepresentation of artist’s work by relying on theories outside copyright, such as K

Obtaining protectiono Copyright protection in Canada (and in US, Europe, Japan, everywhere) is automatic on the creation of the

worko Nevertheless, can register copyright with the Canadian Intellectual Property Office to obtain a

presumption of validity (usually people only do this if/when they want to sue someone)

Copyright Act, s. 53(1): The Register of Copyrights is evidence [not proof] of the particulars entered in it…

Term of protection

Copyright Act, s. 6: The term for which copyright shall subsist shall, except as otherwise expressly provided by this Act, be the life of the author, the remainder of the calendar year in which the author dies, and a period of fifty years following the end of that calendar year.

o If you have more than one author, the term runs from the death of the last oneo (International minimum standard is 50 years, but many countries go higher)o The author cannot be a corporation (“corporations cannot express”), so there is always a fixed term

Eldred v. Ashcroft, 123 S.Ct. 769 (2003) (US SC)FactsConstitution gives Congress power to set copyrights for a “limited time… to promote the progress of Science”1998: Congress enlarges duration of copyright to 70 years (in some cases 95) from 20, to confirm with Berne ConventionIssues: (1) Does Congress have authority to extend the terms of existing copyrights?Holding (Ginsburg, 7-2): (1) Yes.1. “Limited time”E seeks to read into text of Copyright Clause the command that when a time it is set it is forever fixed – but “limited” does not mean

thisHistory reveals congressional practice of granting authors of existing copyrights the benefit of term extensions so that current and

future copyrights receive same treatmentIt is for Congress to decide what is a rational exercise of their constitutional copyright powerCongress sought to give US authors the same protection in Europe as European counterparts; may provide more incentive for other

authors to disseminate their work in USE claims that extensions effectively permit indefinite (not “limited”) copyright – but a 20-year extension is not indefinite2. Other argumentsE claims that extension overlooks “originality” requirement (work is no longer original when more copyright granted) – but the

originality requirement does not apply to extensionsE claims that extension fails “to promote the progress of Science” (does not stimulate creation of new works but just adds value to

existing works) – but it is for Congress to decide how to pursue Copyright Clause’s objectives, and Congress has routinely changed duration

E claims that extension ignores copyright’s quid pro quo by giving something for nothing – but the author exchanges his work for copyright protection, however renewed or legislated

E claims that extension is a content-neutral regulation of speech – but Copyright Clause and First Amendment were adopted close in time, and so copyright’s limited monopolies are compatible with free speech; also copyright distinguishes ideas from expression and provides a “fair use” exception

Ratio: copyright can be extended for existing and future works without abrogating the intent or restrictions of the Copyright ClauseDissent (Stevens)1. Comparison with patents, which cannot be extendedPatents are designed to provide public access to inventions as soon as possibleGovernment cannot unilaterally reduce patent term (abrogates “bargain”) – so shouldn’t be able to extend it etherPurpose of encouraging new inventions and interest in advancing progress are not served by increasing termThese principles apply to copyrights as well; extensions are a gratuitous transfer of wealth from the public to the author2. Other argumentsA claim that extension creates incentive to preserve perishable copies of old copyrighted films – but this does not promote new

works, applies equally to works with expired copyright, and remedy bears no relationship to alleged harmReason for increasing inducement to create something new does not apply to already-created workExtension violates “limited time”Dissent (Breyer)Copyright statutes must serve public, not private ends, must seek “to promote the progress of Science,” and must create incentives

for authors to create while eliminating restrictions on dissemination after a “limited time” has passed

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Economic effect of this extension makes copyright effectively perpetual; billions more dollars in royalties; difficult to track down dead

copyright holders’ estates/heirs to get permissionThis term length dramatically increases costs at a point in the term when likely benefits from protection diminishTraditional economic rationale for copyright does not apply here: doesn’t encourage creativity, because most authors can’t expect

their work to be popular 70 years later and royalties won’t arrive for 70 yearsThis longer term provides period of protection worth more than 99.8% of protection in perpetuity (difficult to square with “limited

time”)Majority relies on uniformity of US/European terms – but uniformity is not achieved with regard to many economically significant

works, and European and US patent laws have long coexisted despite differencesCopyright Clause assumes that disappearance of monopoly, not its perpetuation, promotes dissemination of works in existenceNothing in the Clause grants Congress the right to extend copyright terms

What are the exceptions to the right?These things can be done to/with a copyrighted work without infringing the author’s copyrightFair dealing

o Based in statutory language (cf. US equitable approach to fair use, below)

Copyright Act, s. 29: Fair dealing for the purpose of research or private study does not infringe copyright.Copyright Act, s. 29.1: Fair dealing for the purpose of criticism or review does not infringe copyright …Copyright Act, s. 29.2: Fair dealing for the purpose of news reporting does not infringe copyright …

o This language is fairly narrow: does not use words like “includes”, etc. – but question of what is “fair” remains Assessment of purpose, number of copies, extent of copying, etc. (see CCH below) Commercial character of use of copies was not really addressed in CCH (i.e., lawyers used the copies to

make money)o Certain other exceptions apply to libraries, archives, collections, etc.o Unclear whether fair dealing rights can be K’d away

CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339Facts: see aboveIssue: were the LSUC’s dealings with CCHCL’s works “fair dealings” under Copyright Act s. 29?Holding (McLachlin, for the Court): yes Law Society of Upper CanadaThéberge: Copyright Act balances public interest in dissemination of works (users’ rights) and the author’s just rewardFair dealings exceptions are a part of users’ rights, and specific exemptions are provided for educational institutions, libraries, etc.Onus is on defendant to show that dealing has been fair – but fair dealing is better understood as integral to Copyright Act than as a

defenceLSUC can rely on its general practice to establish fair dealing, rather than being forced to adduce evidence that every patron uses

the material provided for in a fair-dealing mannerReproduction of legal works for purpose of research is an essential element of legal research processPurpose of dealing: research as an allowable purpose; LSUC’s Access Policy provided reasonable safeguardsCharacter of dealing: copying a work for the purpose of research on a specific legal topic is generally a fair dealing; LSUC used

reasonable discretionAlternatives to dealing: not apparent that any were availableNature of work: generally in public interest that access to judicial decisions and legal resources not be restrainedEffect of dealing on work: no evidence showed that CCHCL’s market declinedRatioTo show that a dealing was fair under Copyright Act s. 29, defendant must prove (1) that dealing was for research or

private study and (2) that it was fair“Research” is to be given a large and liberal interpretation, not limited to non-commercial or private contexts“Fairness” is a question of degree, and can consider (1) purpose of dealing (assessed objectively), (2) character of

dealing (may consider custom/practice in trade/industry), (3) amount of dealing, (4) alternatives to dealing (availability of a license is irrelevant), (5) nature of the work, and (6) effect of dealing on the work (if reproduction is likely to compete with market of original work, may suggest unfairness)

These factors may be more or less relevant depending on factual context – and there may be othersNotesGreat Library was not in the business of making photocopies, so the activity’s commercial character was not predominantCrown holds copyright in SCC judgments – but unclear whether a judge retains copyright in his/her decisionPrior to CCH, the courts gave very narrow interpretations of research and private study – here, court decided instead to consider

dissemination as a fundamental right CCH has encouraged more professors to put more course content onlineThis case was a test case, a set-up created to test the law and establish rulesSet up a system of “user rights” as a contrast to the legislated exceptions

Fair useo US equivalent of fair dealing; an equitable right that the courts have read ino Fair use is wider, more open and flexible concept; an overall approach without the Canadian categorical approacho Balance of interests of copyright holder against those of the publico Almost any commercial use is presumptively unfairo Non-commercial use only unfair if strong evidence of likely future harm

Sound recordings

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Copyright Act, s. 80(1): “…[T]he act of reproducing all or any substantial part of (a) a musical work embodied in a sound recording, … onto an audio recording medium for the private use of the person who makes the copy does not constitute an infringement of the copyright in the musical work…

o Downloading music in Canada from any source in Canadao We have levies on blank media (e.g., blank CDs) that are used to pay artists in compensation – the quid pro quo is

permission to downloado Recent debates have centred on whether such levies should apply to iPods (for which the levies could be quite high,

depending on memory size); courts have for now said that this is beyond the Copyright Board’s jurisdictiono No other digitised work is similarly coveredo See Grokster above for the US take on this rule

Parodyo No explicit exclusiono Is any or all of them fair dealing?o Would it be fair use in the US?

In the US, much parody would be considered political speech, and would thus be protected There are no moral rights in the US, so the artist’s control over the destination of his work is more limited

o Distinction between parody of subject-matter of work (see Koons below) and parody through the use of the work (e.g., Woody Guthrie’s song in JibJab)

o See also BCCA

Rogers v. Koons, 960 F.2d 301 (1992)FactsR (photographer) composes and takes a picture of “Puppies”, which becomes part of his catalogue for further useK (sculptor) bases his work “String of Puppies” on “Puppies”, which he found on a note card and considered part of the “mass

culture” he wanted to parody – without R’s authorisationK gives the card to his artisans and, over time, explicitly directs them to sculpt a work that looks like the pictureIssue: (1) Did K copy without R’s authorisation? (2) Can K benefit from the parody exception [fair use in the US] to copyright infringement?Holding (Cardamone): (1) Yes. (2) No. Rogers1. Copying without authorisationR must demonstrate that K copied his protected work without authorisationNo reasonable juror could find that copying did not occur (direct evidence; importance of direct copying to the art; incredible

similarity)Decision-maker need not have any special skills beyond those of the lay personFocus is on similarity of expression, rather than on facts, ideas, or conceptsK used the identical expression of the idea that R created; K “copied” the originalWhere dissimilarity exceeds similarity quantitatively or qualitatively, there is no infringement2. Fair useComment on or criticism of copyrighted work may be a valid use under the fair use doctrineCopied work must be at least partly an object of the parodyCannot accept K’s claim that his action in a tradition of commenting upon the commonplaceEven if “String of Puppies” is a satirical critique, it is difficult to discern any parody of the photograph itselfRatio“Substantial similarity does not require literally identical copying of every detail”Ordinary observer test: “whether an average lay observer would recognise the alleged copy as having been

appropriated from the copyrighted work”“[N]o copier may defend the act of plagiarism by pointing out how much of the copy he has not pirated”Rule’s function is to ensure credit is given where due audience must be aware that underlying the parody there is

an original and separate expression, attributable to a different artistNotesIs K criticising this particular work, or criticising popular culture through this work?Movement between media is still considered as copyright-protected (e.g., transformation through translation)Arguably, the expression is the same, but the idea of K’s piece is different (cf. Deschamps’ urinal in an art gallery) – though the

idea/expression distinction is debatable and not entirely clear (is the idea the physical instantiation, or does the expression colour it?)

Court completely ignored idea/expression dichotomy (as they usually do: those questions aren’t answerable)Judge did seem to accept that this was a parody – but says that it could have been done without copying this workCourt held that K could have used other pictures to make his statement – but this is a problematic argumentK’s commercial benefit may have something to do with the judgment against himWe don’t have parody cases in Canada (we use CCH and its legacy instead), so we study US cases instead

Overlap with other areas of IPTrade-marks

o Copyright includes right to prevent the importation of works in order to sell, trade or distribute the work (s. 27(2)) Copyright used to prevent importation of goods bearing logos (e.g., Euro-Excellence) No ability to sue for importation and resale in TM law, but under copyright law there was an avenue

(though it didn’t work, for technical reasons)o Copyright is much less coherento Some argue that trademark is the only part of IP that makes sense (reasoning based on facts, intuition, evidence)o Copyright is owned by designer; company owns trademark

Patentso Both are creatures of statute

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Protection is more incoherent for both copyright and patent than for trade-mark: no use requirement (though some

copyright tests look like use tests); no registration requiremento Copyright applies to computer programs (as literary works) while patent law applies to processes that use computer

programs That is, both rights can subsist in the same object Patent protection is indirect in Canada (direct in US) Computer programs involve some of the idea/expression questions we’ve already discussed The interest in a computer program is not its expressive quality but its function (cf. Michelangelo’s David) –

so copyright protection is an awkward fit here Because computer programs are functional, a premium is put on efficiency; often only a few efficient ways

to accomplish a given function expressive options are limited similarity between computer programs difficult to separate what is expressive/protected and what is not

Altai case emerged from US and developed a test

Computer Associates International v. Altai, C.A. 2 (N.Y.), 1992FactsCAI and A are computer software industryCAI’s Scheduler program contained a sub-program called Adapter, which maps a program language onto computer’s OSA began to market own scheduling program, ZekeWilliams (A’s President) recruited Arney (CAI programmer) to assist A in updating Zeke; did not know that Adapter was part of

SchedulerArney moved to A, and took copies of source code for Adapter with him; sold Williams on idea of program similar to Adapter (without

saying that his idea stepped from Adapter); created this program, called Oscar, of which 30% was coped from AdapterCAI learned of this, secured copyright on Scheduler, and brought copyright and trade secret misappropriation action against A; this

is when A first learned of the copyingWilliams initiated Oscar’s rewrite, excluding ArneyIssues: (1) Did A infringe CAI’s copyright? (2) Did A misappropriate CAI’s trade secrets?Holding (Walker): (1) No. (2) Yes.1. CopyrightA has conceded liability for copying Adapter into earlier version of OscarPlaintiff can prove copying by direct evidence, or by inference through (1) access and (2) substantial similarity (both

satisfied here)Copyright protection extends beyond textual form to non-literal componentsPost-purge, A made sure that no literal elements of Adapter remained in Oscar – but CIA claims ongoing structural similarityLegislative history shows that Congress intended computer programs to be protected as literary worksCopyright does not protect the idea, but only the expression of the idea – but difficult to distinguish, particularly given

utilitarian nature of computer programsNecessarily incidental elements are not copyrightable(Articulates 3-step test below)Policy considerations: copyright balances advantages to creator (monopoly) and public welfare (encouraging creativity)Feist put the “sweat of the brow” doctrine to restCopyright registration not always ideally suited to address computer scienceExpert testimony is usually considered “irrelevant” because test for illicit copying is based on lay observers’ perception – but judges

limited by their lay perspective can incite expert testimonyAfter rewrite, there was virtually nothing identical in Oscar and Adapter copyright claim fails2. Trade secretsTrade secret protection is necessary and integral to IP protection because it protects discovery of ideas/processes/etc.Defendant’s breach of duty is the gravamen of trade secret claims; provides the “extra element” qualitatively

distinguishing trade secret claims from copyright claimsActual notice not required; constructive notice is sufficientArney breached confidentiality agreement with CAI; A may have been on constructive notice of this breachNewer Oscar did not contain copyrighted expression, but still embodied many of CAI’s trade secrets, was created with knowledge of

trade secret violations CAI’s claim succeedsA cannot recover damages for trade secrets in older Oscar because CAI has conceded copyright liability there – but can recover for

trade secrets in newer OscarRatio: 3-step procedure to determine whether non-literal elements of 2 or more computer programs are substantially similar (copyright):1. Abstraction: break down allegedly infringed program into constituent structural parts (levels of abstraction)2. Filtration: filter out elements dictated by efficiency (where expression “merges” with idea – but careful because

not all program structure is informed by efficiency concerns), necessarily incidental expression (“stock” devices), and elements taken from public domain (cannot be copyrighted)

3. Comparison: compare kernel(s) of creative expression with structure of allegedly infringing program, assessing substantial similarity and copied portion’s relative importance

o Both are limited in time (although some argue that they aren’t because they can be extended, and there have been efforts to increase copyright term)

What international protection is granted?Berne Convention for the Protection of Literary and Artistic Works, 1886 up to Paris Revision of 1971

o Universal protection throughout member states: as of the moment a work is createdo National treatment (cannot treat any other country’s nationals worse than your own)o Absence of formalities: no registration required (though you can if you want to – as in Canada)o Term of protection (life + 50 years)

Universal Copyright Convention

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o US did not sign on to Berne until very recently, so sponsored this insteado For non-signatories of the Berne Conventiono States entitled to retain certain formalities (e.g., use of © symbol in US)o Term of protection defined by reference to term of yearso Less detailed than Berne Convention

Obtaining international copyright protectiono For Berne members (including all WTO members), once obtain copyright in Canada, obtain copyright in all other

member countries according to their copyright lawso For non-Berne but UCC members, may have to register to obtain copyright in that member stateo TRIPS under the WTO

Agreement on Trade Related Aspects of Intellectual Property Rights under WTO Agreements (TRIPS) Requires compliance with Berne (1971) National treatment Most-favoured-nation treatment (can discriminate against own nationals, but cannot discriminate between

other nationals) Protection of computer programs and compilations of data Protection of performers and broadcasting

o WIPO Copyright Treaty Not universally adhered to; mostly developed countries with a heavy stake in internet and digital

development Canada has signed but not ratified Extends copyright to:

Computer programmes (art. 4) Databases (art. 5): protected in Europe through special legislation; in US/Canada through

copyright Right to authorise distribution of work and copies of the work (art. 6) Right to control rentals of works (art. 7)

Digital Rights Management under the WIPO Copyright Treaty Protection against circumvention of technological measures (art. 11: artists use technological

measures to prevent copying; this measure requires countries to stop people from doing an end-run around these measures)

Protection against removing rights management [i.e., who is the author] information (art. 12)o WIPO Performances and Phonograms Treaty

Extends rights to performers, making them equivalent to other performers Moral rights (art. 5) Broadcast, communication and fixing of performances (art. 6) Right to prevent reproduction (art. 7) Right of distribution (art. 8) Right of rental (art. 9)

Digital rights management (art. 18 & 19)o Digital Millennium Copyright Act (US)

US had tried to pass measures to protect digital rights management; then got WTO to create WIPO; then returned to Congress and said “now we have to comply”

“No person shall circumvent a technological measure that effectively controls access to a work protected under this title” (Section 1201(a)(1)(A))

“No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that …is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure” (Section 1201(b)(1))

FILM SCREENING: Brett’s documentaryOpen source film: opening source “code” to allow people to see the whole picture and to use it for their own projectsActivism: putting media out to be used and repurposedAudience inclusion: helped via technological developments such as YouTube, Friendster, MySpace, FacebookMet Girltalk: remix culture; crowd as part of experience; audience filmingPurposive quest to make an illegal filmCreative Commons has too many licenses

o Provides the opportunity to use a non-commercial licenseo Brett is technically a profiteer, because he is making his movieo Because he has tens of thousands of images, he must contact each copyright owner for permissiono Has started to force people to submit their segments via Creative Commonso Unclear what will happen if people submit their own work under a Creative Commons, but that work contains

copyrighted material“Fair dealing” in Canada is narrower than “fair use” in the USAThe movie

o Intro Peer-to-peer sharing of movie: theft or sharing ideas? Recap of Grokster Music sharing was made illegal driven underground

o Girltalk Presented as “just another guy” whose music “does something to you” Making music as sampling/cutting up/cataloguing – and then processing/compilation/results “Sounds nothing like the original” an original product? Copying as nothing new – several examples of musicians who’ve done it repeatedly through the years

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) Copyright registrar doesn’t know whether it’s infringement; whether there’s a lawsuit will depend

on whose stuff is taken Recording company demands a few thousand up front, plus a share of copyright (extrapolates to approx.

$1.5M per Girltalk album)Discussion

o Documentary makers must get “errors and omissions” insurance, which can only be obtained after a lawyer has signed off on it

o Lawyers have told Brett to claim that the images of Girltalk playing are to make the audience enjoy it, rather than to comment

o Girltalk had his music taken off of iTunes and other online vendors; may be available in brick-and-mortar storeso Unclear if “fair dealing” is tested on a scene-by-scene basis, or looking at the entire movie

Nature of work Character of dealing (intention) Does the documentary get in the way of Elton John’s ability to sell CDs? Does Girltalk’s work? This movie may increase accessibility to the original work

o Unclear if Brett would be confined to the narrow defence of fair dealing or could avail himself of a wider, US-style fair use defence

o Girltalk’s work is illegal – so reproduction in this documentary is potentially illegal tooo Documentary moviemakers in US have published a Best Practices and Fair Dealing guide; Canadians are following

suito Some feel that our generation is consistently breaking the law, which breaks down the rule of law more broadly – is

this a cultural practice?o Copyright has become a pervasive issue post-Internet; competing interests everywhereo Why is YouTube not being sued?

Grokster was decided based on inducement to breach copyright YouTube knows that copyright is being infringed on its site; but Digital Millennium Copyright Act allows

YouTube to claim in defence that they will take down any copyright violation that is pointed out to them Questions as to whether Canada will adopt a similar “take-down” regime

o The PR effects of suing copyright infringers are likely considered by record companies when deciding when/how to bring suits – and they’ll often decide against it because of bad PR and increased publicity for the infringer

o BUT: there’s still the chilling effect of the insurance requirement before a documentary is shownThe “neutered” (viz., copyright-friendly) version of the film – is it more like criticism/review than the previous?

o The filmmaker now speaks over much of the music, making it more obviously a documentaryo But – is having to ramp up the level of commentary disruptive of the strength of the message?

Another scene: Negativland (cultural parody)o Argument: creative impulse is applied to unoriginal ideas – not everything is privately owned, not everything is

consumption – mass-produced digital media are not different from making a painting of a flowero Argument: most creative processes build or draw on others’ processeso Disney sued a Mickey Mouse parody artist – and he intentionally lost, so that he could demonstrate Disney’s idiocyo Hollywood was created because people moved there to escape Edison’s cinema patent laws – and is now asserting

dominance over the industryo US pressure led to Canada’s passage of new copyright laws, criminalising filming in movie theatres

Discussion: how do we reconcile our need to maintain ownership over what we produce with what the incitation to create?

c. Trade SecretsProtection at CVL

o A trade secret is: Information That is not generally known in the industry or easily accessible With a commercial value (tend not to be about private rights/privacy) In respect of which the owner takes reasonable precautions to maintain its secrecy (how secrecy is

maintained depends on the nature of the secret)o Allowed to disclose confidential information when it is in the public interest (CCQ 1472)o E.g., customer lists, business plans, market surveyso CCQ uses the term, but neither defines it nor recognises the panoply of associated rights and obligationso Liability to an employer for disclosure of trade secrets defined at CCQ 1612

Protection at CMLo Confidential information: cannot be completely in public domain although can be application of thought to

information available to the publico Was communicated under agreement of confidentiality or in circumstances indicating its confidential natureo The receiver may only use the information for purposes for which it was conveyed; cannot communicate to a third

party (original owner could get an injunction; could also claim damageso A much more fluid and less defined notion than at CVLo The Court in Lac Minerals says that it is neither property nor K nor tort – so what is it? (Gold: it’s best considered as

proprietary; it’s considered a property right in the UK)Functionally, it’s easier to understand what patents are in reference to trade secrets

o Most justifications for patents are against a background of trade secretso But this is a lie – patents predate trade secrets; the very word means “open” and comes from “letters patent”,

instruments written by the King for all to read (instituted by William the Conqueror)o If you think about a new invention, the easiest thing to do to protect it is not to tell anyone

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) Trade secrets are significantly cheaper than patents

d. PatentsPatents as the most important form of industrial property

What is included?Patent rights as negative rights

Patent Act, s. 42: Every patent granted … shall, subject to this Act, grant to the patentee … the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used ….

o Again, the law frames this as a positive right, when it’s actually a negative right to veto others’ construction and use (per Binnie in Harvard College)

Term of protection

Patent Act, s. 44: Subject to section 46, where an application for a patent is filed under this Act on or after October 1, 1989, the term limited for the duration of the patent is twenty years from the filing date.

o Filing date is when patent application is submittedo Unlike passing off, trade secrets and copyright – but like trademarks – must apply to get this protectiono In Canada, application is filed with CIPOo If you apply in many countries, term runs from the date when you first apply to the first of them

Obtaining a patent

Patent Act, s. 27(1): The Commissioner shall grant a patent for an invention to the inventor or the inventor’s legal representative if an application for the patent in Canada is filed in accordance with this Act and all other requirements for the issuance of a patent under this Act are met.

o Mandatory content of application

Patent Act, s. 27(3): (3) The specification of an invention must(a) correctly and fully describe the invention and its operation or use as contemplated by the inventor;(b) set out clearly the various steps in a process, or the method of constructing, making, compounding or using a machine,

manufacture or composition of matter, in such full, clear, concise and exact terms as to enable any person skilled in the art or science to which it pertains, or with which it is most closely connected, to make, construct, compound or use it;

(c) in the case of a machine, explain the principle of the machine and the best mode in which the inventor has contemplated the application of that principle; and

(d) in the case of a process, explain the necessary sequence, if any, of the various steps, so as to distinguish the invention from other inventions.Patent Act, s. 27(4): The specification must end with a claim or claims defining distinctly and in explicit terms the subject-matter of the invention for which an exclusive privilege or property is claimed.

Specification (opposite of trade secrets) are set against the claim (the boundaries within which the veto operates: cf. the boundaries in a land claim)

Only people can be inventors (not corporations); someone else, including a corporation, can be the assignee (usually the employer)

Patent Act only gives the inventor a right; it’s the CML/CVL that governs who gets title (e.g., the employer) Date of patent doesn’t really matter, given that date of filing determines term Patents are classified by subject-matter, grouped for easier understanding and parsing Written in half-scientific, half-legalese language The fewer words used, the broader the claim – people make successively more precise claims in the

hopes that the broadest one will “stick”o Review of patent application

File application with patent office (usually written by patent agent) Examination of patent

In Canada, must request; elsewhere, it’s automatic Patent examiner should have some knowledge in the field You hope that the examiner says “no”, because otherwise you haven’t asked for enough As long as the specification supports your claim, you can amend it

Some jurisdictions (not Canada) allow for opposition proceedings Competitors and those who do not like the technology can try to strike it down Where there is no opposition proceeding, invalidity argued instead in court by putative infringer

(can do so pre-emptively or after-the-fact) Issuance of patent

o Mere fact that patent is issued does not mean that it is valid Final decision is made by courts (which do not have considerable expertise, and which do not often defer

to patent office’s expertise) High proportion of patents addressed in courts are struck down – but patent infringement actions are VERY

expensive (approx. $1M in Canada), so are not often undertaken Most US infringement trials are jury trials risk is high, because people don’t know what jury will decide

settlement is more common of 80


What are the criteria for protection? (THE CLAIM)An invention

Patent Act, s. 2: “Invention” means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter”

o Original protection was for skills, not things – only by 18th century did the word begin to refer to an object in which skill is embedded

o Something is an invention if it would not exist in the form described in the patent claim without human intervention

o Not something that nature produced – but a claimed invention is patentable even if it is identical to that which exists in nature

E.g., could not patent xylem/phloem – but can patent planting trees on salty land to desalinate it This is why you can get a patent on a human gene everywhere but in its natural setting

Patentable subject-mattero Computer programs?

Patent Act, s. 27(8): No patent shall be granted for any mere scientific principle or abstract theorem.

Computer programs are protected by copyright; they are a series of instructions, and thus seem like a process

Schlumberger Ltd. v. Canada (Patent Commissioner), [1982] 1 F.C. 845 (CA)FactsSL tried to patent a process for improving use of measurements in petroleum boreholes, which were previously unreliableProcess involved recording measurements on magnetic tapes, and transmitting them to computer programmed with mathematical

formulae that converted the information into readable materials for peopleIssue: is this invention patentable?Holding (Pratte): no Canada (Patent Commissioner)Computer programs are not patentable under the ActSL claims that invention is not a computer program but a process for transforming measurements into useful information that is just

effected by the computerNothing new in using computers to make this kind of calculations – what is new is discovery of the calculations to be made and the

formulae used to make themIf calculations were made by people and not computers, they would be considered mental operations and thus not patentableIf SL were correct, use of computers would transform an unpatentable subject-matter into something patentable, and would make

computers widen the scope of patentable materialsRatioIndividual mathematical statements are not patentable, so a series isn’t eitherA computer program is just a series of “mental processes” joined together not patentable in CanadaNotes: good patent agents can get around this by claiming not the algorithm but rather the process that the program undertakes

o Methods of treating living humans or animals by surgery or therapy? Diagnosis?

Tennessee Eastman v. Canada (Commissioner of Patents), [1974] S.C.R. 111Facts: TEC seeks to patent a method for joining/bonding surfaces of incisions in living animal tissue with an existing materialIssue: is this method an art or process, or an improvement on an art or process, under the Patent Act (i.e., is a new use for surgical purposes of a known substance an invention)?Holding (Pigeon, for the Court): no Canada (Commissioner of Patents)Material itself (even when prepared for medical purposes) is not patentable – and it’s not in the public interest to make it soExaminer denied patent because the process was novel, useful, and unobvious, but medical processes are not patentableThis is not an abstract theorem, but rather a practical application – but the invention is the discovery that a known adhesive

substance is adaptable to surgical useNew substance useful in medical/surgical treatment of humans/animals is an invention, as is the process for making a substance –

but treatment using the new substance is not an inventionRatio: methods of medical and surgical treatment are not contemplated in the definition of “invention” as a kind of “process” (i.e., treatments performed in or on the body are not patentable)Notes: diagnostic procedures are patentable in Canada, but not in Europe

o Moral qualms/questions European position: inventions the commercialization of which are against public order or morality are

unpatentable (“violation of fundamental shared norms”) Stem cells are questionable on this front Animal testing: can modify a mouse to have cancer because this might really help people; cannot

modify it to be hairless to test hair replacement cream US position: “anything under the sun that is made by man [sic]”

Diamond v. Chakrabarty, 447 U.S. 303 (1980)Facts: C (microbiologist) filed 3 patent applications for bacterium that helps to treat oil spills: process claim (accepted); claim for inoculum (accepted); bacteria themselves (rejected)Issue: does C’s micro-organism constitute a “manufacture” or “composition of matter” (i.e., is it patentable)?Holding (Burger5-4): yes Chakrabarty

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Congress contemplated that patent laws could be given wide scope; legislative history also supports broad constructionPatent law does not embrace every discovery (e.g., laws of nature, physical phenomena, abstract ideas)C’s micro-organism is patentable: not a hitherto unknown natural phenomenon, but a product of human ingenuity “having a

distinctive name, character, [and] use”New bacterium has different characteristics from any found in nature, and is usefulRelevant distinction is not between living and inanimate things, but between products of nature (living or not) and human

inventions; here, bacterium is result of human ingenuityPlant Patent Act excludes bacteria – but this does not support D’s positionD claims also that micro-organisms cannot qualify for protection until Congress authorises such protection (best left to legislative

process) – but legislation is cast in broad germs, statutes not to be confined to applications contemplated by legislators (esp. with patents, which are by nature about unanticipated inventions)

Grant or denial of patents on micro-organisms is unlikely to deter genetic research or attendant risks; whether C’s claims are patentable may determine whether research efforts are slowed, but that is all

Court is unable to entertain further such arguments; it is for the legislatureRatioA product of human ingenuity “having a distinctive name, character, [and] use” can be patentedRelevant distinction is not between living and inanimate things, but between products of nature (living or not) and

human inventions; here, bacterium is result of human ingenuityDissent (Brennan)Patent laws reconcile antipathy towards monopolies with need to encourage progressMust not extend patent protection further than Congress providedCongress addressed general problem of patenting animate inventions and has chosen carefully limited language granting protection

only to some – bacteria are excludedCongress thought it had to legislate to make agricultural “human-made inventions” patentable, and did so in a limited way items

outside the scope of the legislation are not patentableCongress has included bacteria within scope of legislative concern, but not within patent protectionIt is for Congress, not the Court, to broaden or narrow the reach of patent laws

Diamond v. Diehr, 450 U.S. 175 (1984)FactsDiehr filed patent application for moulding raw, uncured synthetic rubber into cured precision productsProcess involved using known time, temperature, and cure relationships calculated by means of a known equation, but using a

computer to make continuous calculationsIssue: is this process patentable?Holding (Rehnquist, 5-4): yes DiehrCongress intended “anything under the sun that is made by man” to be patentable“Process” was not officially added to patentable things until 1952, but processes were previously protected as artProcess includes “transformation and reduction of an article to a different state or thing”This concept is not altered if a computer is used at several stages of the processDiehr does not seek to patent mathematical formulae, but rather a process for curing rubber; the process involves an equation, but

they do not seek to pre-empt use of the equation, but rather its use in this particular processA law or nature of mathematical formula may be patentable if applied to a known structure or processQuestion of what is novel is separate from whether it is statutorily classed as patentableRatioA claim drawn to subject matter otherwise statutory does not become non-statutory simply because it uses a

mathematical formula, computer program, or digital computerA process can be patented if it involves a mathematical formula or law of nature, provided that it does not try to

render use of the formula or law exclusive to the patenteeDissent (Stevens)Re Benson: new mathematical procedures that can be conducted in old computers – like mental processes and abstract intellectual

concepts – are not patentableFlook: Benson rule not limited to claims limited to the algorithm itself; improved method of calculation is not patentable, even if part

of a physical process; algorithm to be treated as prior art, and then process examined for noveltyMust first understand what the inventor claims; outcome of litigation often depends on this understandingDiehr doesn’t claim to have discovered anything new about the curing processNot a new method for measuring temperature: nothing in application suggests that temperature measurement is unusual; devices

for measuring temperatures are familiar; this is simply repeated use of a known calculationMajority has misunderstood the nature of the invention and failed to recognise the difference between discovery and noveltyIrrelevant that an unpatentable subject matter may be novelGottschalk v. Benson: program for solution by digital computer of mathematical problem is not patentableFlook: computer program not made patentable by addition of post-solution activity that is not novelBroad question of whether computer programs are patentable is not for the Court to decideNotesUSSC changed the US’ position: as long as something affects the natural world, it is patentableOnus shifted: it used to be that you could only patent what Congress said you could; now you can patent everything that Congress

says you can’t

Canadian position

Harvard College v. Canada (Commissioner of Patents), 2002 SCC 76Facts:HC applied for patents on the process of making an oncomouse (mouse useful in cancer testing) and other onco-higher life forms,

and on the oncomouse itself

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Patent Commissioner granted process claims, but refused the claims on the transgenic mice and mammals – it is only the

mice/mammals claims that are at issue here, as all judges agree on the patentability of the processIssue: did Parliament intend the definition of invention (particularly, “manufacture” or “composition of matter”) in the Patent Act to encompass higher life forms such as the oncomouse?Holding (Bastarache, 5-4): no Canada (Commissioner of Patents)1. Standard of reviewCommissioner has no discretion to refuse a patent based on public policy considerations independent of Act’s express provisionsCourts are as well placed as Commissioner to determine patentability of higher life formsNo privative clause, right of appeal, question of law correctness standard here (but not for all Commissioner’s decisions)2. Definition of inventionPatentability of higher life forms is for Parliament to decideParliament did not intend to include higher life forms as inventions; “manufacture” and “composition of matter” are ambiguous, but

best read as exclusivea. Words of the ActIf higher life form is to fit within definition of invention, must be as “manufacture” or “composition of matter”; patents not to cover

“anything under the sun made by man”“Manufacture”: non-living mechanistic product or process“Composition of matter”: cannot be too broad (or other categories are redundant), but does not include higher life forms

[weak argument]; oncomouse egg is a composition of matter, but mouse grows through complex processes with no human intervention; same mouse would exist regardless of human intervention

Parliament knew about plant and animal breeding, and didn’t include them, probably because they are “discoveries”Patenting higher life forms is a radical departure from traditional patent regime, possible only through Parliament’s clear intentb. Scheme of the ActPatenting higher life forms raises unique concerns that cannot be adequately addressed by the scheme of the Act; ill-

equipped Act means Parliament never intended “invention” to encompass this subject-matterSome of the policy concerns associated with this case are better addressed outside patent systemHigher life forms self-reproduce, so patent granting includes all progeny: this does not fit with other patentsPlants/animals move independently, so “innocent bystander” could be burdened with patent suitPatents on life forms might deter further innovation by foreclosing research (uniqueness of biomedicine)Concerns over patenting and objectification of human body; “higher life forms” necessarily includes humans; courts not positioned

to draw a line around what is human and which aspects of human life should be excludedAll of the above policy questions are not decisive, but rather indicate that Act is poorly suited to address higher life forms signals

legislative intent that they are not patentablec. Object of the ActCentral objects: advancing research; encouraging broader economic activity – but Parliament still chose to limit what is patentableHC argues for broadest possible definition of invention – but above indications of Parliament’s contrary intent cannot be ignoredd. The Plant Breeders’ Rights ActIf plants were patentable under the Act, PBRA would have been unnecessary – and, regardless, Parliament did not subsequently

address other life forms, suggesting it wanted to maintain Commissioner’s status quo that higher life forms are unpatentablePassage of PBRA demonstrates that mechanisms other than the Act can be used to encourage inventors in biotechnology3. Distinguishing higher from lower life formsPatentability of lower life forms is not at issuePatent Office’s line between higher and lower life forms is defensible based on “common sense”Micro-organisms are produced en masse; animals have distinctive features that prevent them being considered as “compositions of

matter” or “manufactures”TRIPS/NAFTA exceptions for plans and animals show a widely accepted distinctionEven if Court found higher life forms patentable, it would still have to draw linesRatio: higher life forms (whole animals, whole plants) are unpatentable in CanadaDissent (Binnie)No other country with comparable patent system has denied a patent on the oncomouseGrant of a patent reflects public interest in promoting disclosure of advancements in learning by rewarding human

ingenuity1. Statutory interpretationBastarache claims that oncomouse is “composition of matter” plus something – but HC claims only to have invented the genetic

matter, not the “plus”Extraordinary scientific achievement of altering every cell in an animal’s body produces a “composition of matter”Question is not whether Parliament intended to exclude oncomice or higher life forms but whether inventions unanticipated at

enactment of Act are patentable – which it didn’t: wanted instead to encourage new and useful innovations without knowing what they would be

2. International scope of IP lawIP has global mobility, and harmonisation is important for mobility of capital and technologyCommissioner’s decision does not sit well with other countries’Parliament purposely didn’t include an EU-style ability to exempt patents for ordre public or moralityMust distinguish patentability of an invention and regulation of activity associated with an invention3. Commercial and scientific context; financing R&DAct seeks to encourage private-sector innovationOncomice can improve effectiveness of medical research and shorten time required to produce results minimises human suffering

and rewards innovatorsMedical research inevitably relates to life, and its products will often impinge directly or indirectly on “higher life forms”Must be careful not to remove financial incentives to innovation4. Patenting life forms in CanadaHC did not discover something; did not just “follow” laws of nature – instead, invented and engineered the aspect of the oncomouse

that is responsible for its commercial valuedPatent Office allows patents on human genes, proteins, cells, DNA sequences – so not “life” that is unpatentable question

becomes whether Commissioner is justified in drawing a line, and how he has drawn the line of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)US, Europe, Japan, and NZ have issued patents for oncomiceCommissioner is seeking to restrict the legislative definition of invention for policy reasons unrelated to the ActProper distinction is not living vs. inanimate but discovery vs. inventionNot “everything under the sun made by man” should be patentable – checks are utility, novelty, and non-obviousness“Composition of matter” is open-ended; not confined to inanimate matter (if not composed of matter, what are oncomice made of?);

cannot use dictionary definitions or metaphors to narrow the Act’s scopeDistinction of higher from lower life forms: can’t be based on self-replication (because lower life forms do it too); the various

approaches to distinction are arbitrary and not grounded in the Act“Manufacture” has been more expansively interpreted in the past than the majority proposes now5. Other considerationsNothing in the PBRA explicitly bars application under the Act, which confers more exclusive and valuable rights; rights acquired

under both can live togetherCanadian patent system not designed to determine what uses of technology are permissible; Act not designed to

prevent dangerous of ethically questionable inventions from being made/used/sold/importedHC is not being credited with having invented life – just claims to have modified every cell in an organism in a useful way, and seeks

rewards for disclosureParliament is already assessing the legal framework for genetic research; not for the Court to intervene or hasten it6. Policy arguments against patenting the oncomouse Religious grounds – Court is inappropriate forumLack of regulatory framework – patents should not be denied as protest against regulatory shortcomings; court can’t deny

patentability because of novelty or potential impact of an invention; regulation necessarily follows the invention; IP law does not address health and safety regulation

Laws of nature grew the mouse from the egg – utility arises wholly in the oncogene; unclear how to distinguish patentable egg from unpatentable mouse; laws of nature are essential elements of many patents; inventor whose invention harnesses the forces of nature is no less an inventor

HC only affected one gene amongst thousands – genetic modification is not an “add on,” but a fundamental changePublic order/morality (NAFTA/TRIPS exclusions) – presupposes general rule of patentability; Act does not provide for balancing social

interestsUnjust enrichment (HC only added a little to the mouse) – remedies address this, not patentability; every cell in mouse has been

altered; otherwise “free riders” could breed their own oncomiceAnimal rights – animals already commodified and used in scientific researchCommodifying human life – qualitative divide between humans and other animalsEnvironmental protection – not addressed by ActGlobalisation (effect on developing countries) – not addressed in this appealIf patents are not granted, inventors will use trade secrets instead, and trade secrets do not include a disclosure requirement

worse for all of usSum: all of this is for Parliament to decideNotes: Gold: majority just decided what they wanted and then justified it

Monsanto Canada v. Schmeiser, 2004 SCC 34FactsMC patented genes for Roundup Ready Canola, which it licensed to farmers at $15/acre on condition that they not harvest seeds or

replantRRC cannot be distinguished from regular canola except through chemical tests1997: S never purchased RRC, nor obtained a license, but he sprayed his canola with Roundup and 60% survived harvested it1998: MC visits S and puts him on notice that he has likely grown RRC without a license; S plants it anywaysMC tests S’s canola and finds it 95-98% RRCStill unclear exactly how the RRC seed got to S’s land in the first placeIssue: (1) Is RRC patentable? (2) If yes, did S “use” the patented RRC gene and cell?Holding (McLachlin and Fish, 5-4): (1) Yes. (2) Yes. Monsanto Canada1. PatentabilityHarvard Mouse found that higher life forms were unpatentableWhether patent protection extends to activities involving the plant is not relevant to the patent’s validityMC’s patent has already by been issued, and onus is on S to show that Commissioner erred in allowing the patent – has failed, so

patent is valid2. UseMC was deprived of full enjoyment of its monopoly, and S employed the patented invention in a commercial context “use”Arbour writes that patent can only be infringed by use in isolation – but where defendant’s activity involves a thing of which a

patented part is a significant component, infringement is establishedInfringement does not require use of the gene or cell in isolationRatio: it is no bar to a finding of infringement that the patented object or process is a part of or composes a broader unpatented structure or process, provided that patented invention is significant or important to the defendant’s activities that involve the unpatented structureDissent (Arbour)Harvard College held that higher life forms (incl. plants) are not patentable patent claims can’t be extended over whole plantsPlants are not “inventions”; MC filed no claim for the regenerated plant or its progeny1. ValidityOtherwise valid claims can be limited by statute or jurisprudenceIf MC’s claims had been construed to encompass plants, would have been invalidAll of MC’s product and process claims are valid – but cannot extend past where cell begins to multiply and differentiate into plant

tissues (otherwise claim would be for the entire plant) claims are solely for genes/cells in lab prior to regeneration2. ConclusionLower courts erred in construing “use” to include use of subject matter disclaimed by patent (i.e., the plant)Cultivation of plants containing the patented genes/cells does not constituted infringement

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Saving, planting, or selling seed does not constitute infringing useMC can still license use, and can impose K’ual obligationsFinding that possession of plants constitutes “use” means de facto patenting of plantsCanada has sui generis system of protection for plants: Plant Breeders’ Rights ActNotesSo: inventor with patent claim over a gene (or partial gene) has de facto exclusive rights over entire animal or plant

containing that geneIn one fell swoop, undermined entire argument in Harvard MouseGold: one of the worst-written patent decisions ever written; they forget their jurisprudence, create new rules out of nowhere, etc.If you specifically claim entire animal/plant, will be rejected – but if patent cell or DNA sequence, you can get it, and courts will read

it as if it covers entire animal/plant

o Can patent business methods (e.g., Amazon’s one-click-to-your-door online procedure) in US, but not in Europe or Canada

Gold: you can still get around this by manipulating what it is that you apply for a patent for (Gold: difficult to stop people from strategically employing law)

o Likely cannot claim an invention that consists of a correlation between one fact and another: Labcorp v. Metabolite Laboratories, 548 U.S. 2006

Attempt to patent a correlation between a Vitamin B deficiency and higher risk of a disease, with subsequent provision of a course of treatment (i.e., correlation leading to a process, a claim for a means to treat a disease)

Another company came up with a test for a different disease, which could flag a Vitamin B deficiency patent-holding company said that this test would lead doctors to make the patented correlation (because it would be negligent not to) and thus breach the patent

For anyone standing outside the patent system, this seems ridiculous – but it is an invention encompassing something that was not known before

Majority of US SC decided that it didn’t want to decide the case Dissent: this is an invention insofar as it involves a human intervention, but a correlation without more is

not an invention – the result is ridiculous So: we don’t have a final decision on this matter, though it does flow from the logic of “anything under the

sun made by man”Statutory requirements for patentable subject-matter (i.e., after we’ve hived off those inventions that are not patentable, we look

for these criteria amongst those that remain)o Novelty/anticipation

An invention must be new Novelty is destroyed by a single, publicly available source (available anywhere in the world for

Canadian and EU law, available in the US for US law) that both (a) describes the existence of the invention and (b) is sufficient for someone skilled in the art to make it

Just showing the existence of something (e.g., at a trade show) is enough However, you have a year after publishing your own work to file a patent claim

Difference between “novel” and “non-obvious” For many things, there is no single source that points to that one invention (e.g., not everything is

disclosed) “Non-obvious” has similar purpose to “novelty”: should not be able to obtain monopoly over

knowledge that is already in the public domain “Non-obvious” only encompasses specialised sources (“prior art”), rather than any source Unlike novelty, “non-obvious” is permitted to “mosaic” prior art: was invention practicably within

the grasp of others skilled in the art?o Non-obvious/inventive step

“We build and create by bringing to the tangible and palpable reality around us new works based on instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even genius. These advances, once part of our shared knowledge, define a new threshold from which innovation starts once more. And as progress beginning from higher levels of achievement is expected in the normal course, the results of ordinary innovation are not the subject of exclusive rights under the patent laws. Were it otherwise patents might stifle, rather than promote, the progress of useful arts.” (KSR International Co. v. Teleflex Inc., 550 U.S. 2007)

This case was heavily criticised by the Patent Bar Patent system is designed such that the bar for “background knowledge” is continually rising

Test for non-obviousness

Beloit Canada Ltd. v. Valmet Oy, 7 C.I.P.R. 205 (FCA)FactsEach party has infringed the patent granted to the otherPatents are for “Tri-Nip” (combination of previously known elements in the press section of a paper machine)Trial judge found that both patents should be expunged because of obviousness or anticipationIssue: is either patent obvious?Holding (Hugessen, 3-0): noDefinition of obviousness: lack of inventivenessShould deal with it before anticipation, because a patent that lacks inventiveness cannot be novel, but one that lacks

novelty may still be inventiveTest of obviousness is not to ask what competent inventors did or would have done; inventors are by definition

inventiveObviousness to be assessed from PoV of “technician skilled in the art but having no scintilla of inventiveness or

imagination” of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Test: would this person, in the light of the state of the art and of common general knowledge as at the claimed date if

invention, have come directly and without difficulty to the solution taught by the patent?

What is general knowledge? Knowledge generally known and understood by the real life equivalents of the unimaginative

skilled technician in the art Not the same as common knowledge Must be known and widely accepted without question by the bulk of practitioners Knowledge that practitioners may be expected to have as a part of their technical equipment

Significance of prior art

Beloit Canada Ltd. v. Valmet Oy, 7 C.I.P.R. 205 (FCA)Facts: as aboveIssue: is either patent void for anticipation?Holding (Hugessen, 3-0): noDefinition of prior art: lack of novelty; assumes that there has been an invention but prior public disclosureInquiry directed at the invention, rather than the state of the art and common general knowledgeAnticipation must be found in a specific patent or other published document; it is not enough to pick bit and pieces

from a variety of prior publicationsTest: prior publication must contain “so clear a direction that a skilled person reading and following it would in every

case and without possibility of error be led to the claimed invention”

Can’t protect as new an invention that what is already in existence Cannot determine what constitutes prior art with hindsight only

o Would the researcher have found the prior art after a diligent search?o Prior art must be sufficiently disseminated and accepted within the art

Prior art includes written documents such as patents (or published patent applications), scientific/technical articles, and prior use

What kind of prior art?o Written only?o Does traditional knowledge count, and for whom?

o Useful/utility Canada: actual and ultimate utility (Gold: no clue what that means)

Actual utilityo Invention must work for purposes for which it was designed (need not work well)o Invention must serve some positive purposeo Judged using perspective of someone skilled in the arto Benefit to society not relevant

Ultimate utility (Canadian equivalent of “credibility”)o Invention must either work as of date of publication (18 months after priority date) or

inventor must be able to make a “sound prediction” of utilityo If utility claim based on sound prediction, must lay out reasons for that predictiono Prediction must ultimately prove true

US: specific, substantial, and credible utility Specific utility: a utility that is specific to what makes the invention “inventive” Substantial utility: not a “throw away” utility, but a real, substantive use Credible

o The claim of utility must be credible given the state of knowledge in the arto “But a patent is not a hunting license. It is not a reward for the search, but compensation

for its successful conclusion.” (per Fortas J. in Brenner v. Manson, a case in which a scientist tried to patent a molecule that might have had future anti-cancer applications, with recommendations for future research)

Europe: can be made or used in industry (capable of industrial application) European Patent Convention requires that the invention have an industrial application (can be

made; or has an industrial use) European Patent Office has signalled that it may add requirement that someone would actually

want to use the invention (has moved closer in its decisions to the US system)Secrecy and patents

o Until patent application laid open, its contents are secreto Once laid open (at 18 months after priority date), secrecy lost (disclosed on websites, etc.)o So: window of 18 months to have initial contact with patent office, get a sense of their opinion, and withdraw the

application (thus relying on secrecy) Must make the decision prior to the 18-month window If you withdraw, you lose your priority date

o US exception: if you only file in the US, it’s not laid open until the patent is actually granted Other people won’t know you’re patenting – so this is a kind of trap for competitors It used to be that this protection was available for patents filed anywhere, giving incentive for applicants to

prolong negotiations, preserve secrecy, and then rush through to the finish line when they see their competitors putting something on the market (“submarine patents”, which pop up out of nowhere)

o Priority date Everywhere but US: whoever files claim first gets priority US: whoever invents first gets priority – so if someone else claims first, there can be disputes whose

settlement relies heavily on challenging evidence like notebooks, etc. of 80


Description and disclosure requirements (THE SPECIFICATION)Description of the invention must be complete

o No need to describe explicitly how the invention is useful – but must be able to discern usefulness from reading the document

o Adopt the point of view of someone with ordinary skill in the art (“skilled reader”) Cannot require any knowledge other than obvious steps falling within common knowledge of someone

skilled in the art (as determined by patent examiners) This fictitious skilled person does not really exist Patent examiners often have PhDs; they get a couple years’ experience, then go to law school, then

become (highly paid) patent agents high turnover, and they’re not the cutting-edge researchers with really up-to-date knowledge

o Would such a person understand the description to describe all instantiations of the claimed invention? (if not, claim is over-broad)

o If there is evidence that some instantiations of the invention do not work, then claim must be rejected This flows from utility requirement If something is dangerous/inutile (in the sense that it doesn’t do what it’s said to do – i.e., a skin cream

that makes you ill), can’t be patented (cf. a new, patented cigarette that’s still good at being a cigarette) See Minerals Separation

o Would this person understand that all instantiations of the invention would likely work?o “If it is possible for the patentee to make a sound prediction and to frame a claim which does not go beyond the

limits within which the prediction remains sound, then he is entitled to do so.” (per Pigeon J. in Monsanto v. Canada, citing Graham J. in Olin Mathieson Corporation v. Biorex Laboratories Ltd.)

Best modeo Must disclose the “best mode” of using a machine in the specifications – doesn’t have to be explicit, but by reading

the patent you have to be able to understand a way to use the inventiono Some obiter suggesting that this requirement is broader, but likely a mistake (see Thomas & Betts Ltd. v. Panduit

Corp.)o If you describe purpose A but purpose B is the primary purpose, that’s OK (except for machines) – cf. US, where

purpose B (i.e., “best mode”) must be disclosedo BUT: once you’ve described one use, you get a patent for all uses

Biological materialso Pictures/descriptions/diagrams don’t always work for these – so can deposit a sample instead

Patent Act, s. 38.1(1): “Where a specification refers to a deposit of biological material and the deposit is in accordance with the regulations, the deposit shall be considered part of the specification and, to the extent that subsection 27(3) cannot otherwise reasonably be complied with, the deposit shall be taken into consideration in determining whether the specification complies with that subsection.”

US disclosure: the specification must satisfy two requirementso Description

Specification must describe the invention fully Does the description given in the specification include all claimed instantiations of the invention? If not, invention is not fully described

The specification must describe how the invention operates In most cases, a showing that invention does operate is sufficient In other cases (e.g., pharmaceuticals) must provide some scientific evidence to support claim that

works Similar to test in Monsanto v. Canada

o Enablement To be enabled, the specification must give instructions to someone skilled in the art on how to make and

use the invention If not all instantiations of the invention work, then the invention is not enabled Cannot require undue experimentation (apply a reasonableness standard)

This particular requirement is applied slightly more harshly in the US than in CanadaFailure to identify inventors

o In Canada, the failure to list all inventors does not lead to invalidity Not a “material allegation” (material allegations, if wrong, invalidate the patent) See Apotex v. Wellcome Foundation (FCA)

o In US, failure to name an inventor leads to invalidity unless innocent error

35 U.S.C. §256: Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issued a certificate correcting such error. The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.

These inventions might take years to develop, and involve many people (e.g., grad students) competitors can try to locate one of these persons who is not named in the application and foil the patent

Courts are trying to move away from the black-letter lawo Who is the inventor?

Not necessarily the person who is doing the actual work of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) In many labs, the Principal Investigator (PI) doesn’t even touch a test-tube – so who in the hierarchical

chain is the inventor? Unlike copyright, it’s not the physical creator that is acknowledged – it’s the person who conceives of the

idea So you have to “guess” who qualifies as the inventor allows for some leeway in courts deciding against

the applicant law has been made more supple by courts

What is the scope of the right?Infringement

o Making, using, selling or importing invention in Canadao Invention may be embedded in a larger object (car, plant)

Someone sued car companies for using a patented windshield wiper If you patent a cell, you can stop growth of an entire plant that contains that cell When you drive into the US, you are arguably violating the patent on every single component of that car

treaty provisions make it not an infringement to do so

Monsanto Canada v. Schmeiser, 2004 SCC 34Facts: see aboveIssue: Did S “use” the patented RRC gene and cell?Holding (McLachlin and Fish, 5-4): (1) Yes. (2) Yes. Monsanto CanadaWhirlpool: infringement is a question of factPurposive interpretation: question is whether S’s activity deprived MC in whole or in part, directly or indirectly, of full enjoyment of

the monopoly conferred by lawContextual interpretation: patentee’s monopoly generally protects its business interests; inventor not required to describe

advantage/utility in their claimUse of case law: patented genes/cells are not just “part” of the plant – they are the plantMC was deprived of full enjoyment of its monopoly, and S employed the patented invention in a commercial context “use”Arbour writes that patent can only be infringed by use in isolation – but where defendant’s activity involves a thing of which a

patented part is a significant component, infringement is establishedInfringement does not require use of the gene or cell in isolationS claims he can rebut presumption of use because he never used RRC’s Roundup resistance – but this doesn’t account for RRC’s

stand-by utility, and could have sprayed in the futureS’s conduct after learning of infringement (i.e., active cultivation) cannot rebut presumption of useS claims that cultivation of canola is not “use” because plants grow by themselves – but humans have a role, many inventions make

use of natural processes, and S’s actions were deliberate and careful (i.e., S was not an innocent bystander)S claims that MC’s activities infringe on farmers’ rights to keep what comes onto their land – but ownership is no defence to breach

of the Patent Act3. RemedyMC could seek damages or accounting of profits – has chosen accounting of profits, so entitled only to that portion of infringer’s

profit causally attributable to the invention (“differential profit” approach)S made exactly the same profits he would have had he planted regular canola no profit for MCIf MC had sought damages instead, maybe could have got somethingRatio“Use” denotes utilisation with a view to production or advantageBasic principle in determining whether defendant has “used” patented invention is whether inventor has been

deprived, in whole or in part, directly or indirectly, of the full enjoyment of the monopoly conferred by the patentIf there is a commercial benefit to be derived from the invention, it belongs to the patent holderIt is no bar to a finding of infringement that the patented object or process is a part of or composes a broader

unpatented structure or process, provided that patented invention is significant or important to the defendant’s activities that involve the unpatented structure

Possession of a patented object or an object incorporating a patented feature may constitute “use” of the object’s stand-by or insurance utility and thus constitute infringement

Possession, at least in commercial circumstances, raises a rebuttable presumption of “use”While intention is generally irrelevant to determining whether there has been “use” and hence infringement, the

absence of intention to employ or gain any advantage from the invention my be relevant to rebutting the presumption of use raised by possession

Knowledge of infringement is not a necessary component of infringement, but defendant’s conduct on becoming aware of infringement may assist in rebutting presumption of use

Dissent (Arbour)Harvard College held that higher life forms (incl. plants) are not patentable patent claims cannot be extended over whole plantsPlants are not “inventions”; MC filed no claim for the regenerated plant or its progeny1. Purposive constructionWhirlpool: MC’s patent claims cannot be construed with an eye to either infringement or appellant’s defence to infringement,

invalidityCommercial interests are not only consideration: must also consider fairness (interpreting claims in informed/purposive way) and

predictability (tying patentee to its claims); what is not claimed is disclaimed; to be interpreted from PoV of hypothetical worker skilled in the art

Person skilled in the art could not reasonably have expected that exclusive rights for components extended to exclusive rights over plants; MC’s claim ends at point where isolated plant cell is placed into growth medium for regeneration

No other company can use the chimeric gene to create a glyphosate-resistant plant cell that can then be regenerated into a glyphosate-resistant plant

2. ValidityOtherwise valid claims can be limited by statute or jurisprudenceIf MC’s claims had been construed to encompass plants, would have been invalid

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)All of MC’s product and process claims are valid – but cannot extend past where cell begins to multiply and differentiate into plant

tissues (otherwise claim would be for the entire plant) claims are solely for genes/cells in lab prior to regeneration3. InfringementInfringement is “any act that interferes with the full enjoyment of the monopoly granted to the patentee”Purposive construction: defining use as only commercial use (as majority does) means that inventor is not obliged to describe utility

of the invention); utility need not include commercial utilityContextual construction: definition of “use” must be limited by subject matter; “use” to be bounded by scope of the claims; test for

determining use is not deprivation of commercial benefits but deprivation of monopoly over use of the invention as construed in the claims

Case law: does not support extension of patent protection to unpatentable object into which patented product is incorporated4. ConclusionLower courts erred in construing “use” to include use of subject matter disclaimed by patent (i.e., the plant)Cultivation of plants containing the patented genes/cells does not constituted infringementSaving, planting, or selling seed does not constitute infringing useMC can still license use, and can impose K’ual obligationsFinding that possession of plants constitutes “use” means de facto patenting of plantsCanada has sui generis system of protection for plants: Plant Breeders’ Rights ActNotes: see above

o Patent claim construction sets out the four corners of the claim, the boundaries of infringement “Purposive construction” test (Canada)

(Claim construction in Canada always begins before looking at alleged infringement or any validity issues)

Look at claim-by-claim rather than element-by-element What part of this claim is what’s inventive about it? What are the essential elements of the claim? Then we look at the alleged infringement and see if it touches on these inventive elements Argument: claim construction should be fixed 18 months after application, so that it’s most fair to

public for them to “invent around” the patent – should have a test that doesn’t change invention-by-invention

Free World Trust v. Électro Santé, [2000] 2 S.C.R. 1024FactsElectro-magnetotherapy is not new, but FWT discovers new method of controlling amplitude and frequency of electromagnetic

wavesDemers (FWT sales representative) quits FWT and founds ÉS to develop competing electro-magnetotherapy machines using

somewhat different technologyFWT concedes that ÉS’s machine is not exactly as described in FWT’s patents – but claims that ÉS has stolen the substance of its

inventionIssue: (1) Is FWT’s patent valid? (2) If yes, has ÉS infringed FWT’s patent by stealing the substance of its invention?Holding (Binnie, for the Court): (1) Yes. (2) No. Électro Santé1. ValidityÉS claims that an article by Solov’eva describes electro-magnetotherapy such that there was prior art – but too easy to assemble a

dossier of prior art in hindsightLegal question is whether Solov’eva article would enable skilled worker in the field to carry electro-magnetotherapy into practical

use – but article does not address, let alone solve, the technical problems that FWT overcameFWT brought elements together to achieve a new, useful, and ingenious result valid2. InfringementPatent owner has remedy against alleged infringer who does not take letter of invention but takes its “pith and marrow”Patent system must be fair and predictableFWT brought known components together to achieve a useful and ingenious result, but now attacks ÉS for bringing together

different components to achieve comparable result“Central claim drafting principle” (substance, rather than form) vs. “peripheral claiming principle” (language defines legal boundary

of monopoly: preferred in Canada)US approach: invention disaggregated into constituent parts, but all elements treated as “material” (instead of distinguishing

essential from non-essential) and applying “doctrine of equivalents”Patent of uncertain scope is a “public nuisance,” chilling competitionMust keep subjective/discretionary elements of claims construction to a minimumPatent is not addressed to the public, but to an ordinary skilled workerTwo-step approach (literal construction, then substantive construction: rejected) vs. one-step approach (flexibility and common

sense in initial claims construction: approved)Patent to be interpreted as of publication date, rather than date of issueOnus on patentee to establish known and obvious substitutability at date of patent publicationÉS’s device differs structurally and operationally no infringementRatio1. Prior artTest is whether a person “of ordinary skill and knowledge in the field” would be able “understand … the nature of the

invention and carry it into practical use without the aid of inventive genius but purely by mechanical skill”2. InfringementMust read claim language in informed and purposive wayLanguage of claim defines the monopoly; no recourse to vague notions like “spirit of the invention”Claim language will distinguish essential from non-essential elements, identified: on basis of skilled worker; as of

patent publication date; with regard to whether it was obvious that a particular element would not make a difference; according to intent of inventor (expressed or inferred) that a particular element is essential); without resort to extrinsic evidence of inventor’s intention

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)No infringement if an essential element is different or omitted; may still be infringement if non-essential elements

are substituted/omitted

Whirlpool v. Camco, [2000] 2 S.C.R. 1067FactsW’s development work resulted in 2 patents on “dual action” washers with “vanes”; third patent specifically mentioned “flexible

vanes” (rather than “rigid vanes”)Disclosure of “dual action” technology was not in public domain until after third patent had been applied for no prior artC claims that first two patents covered the invention, and that monopoly was improperly extended by third patent (if this is true,

period of infringement is reduced, as is amount payable in compensation)C calls for “plain and unambiguous” reading of the claim (i.e., of “vanes”)Issue: does second patent’s mention of “vanes” comprehend flex vanes?Holding (Binnie, for the Court):Claims, not specification, define the monopoly“Evergreening” a single patent through successive patents prolongs monopoly beyond what the public has agreed to pay1. Principles of patent claims constructionPatent specification begins with disclosure; claims then provide public notice; what is not claimed is disclaimedFirst step is to construe the claims: antecedent to both validity and infringement considerationsC claims that purposive construction should apply only to infringement – but it applies to construction, validity, and infringement:

otherwise construction for validity and infringement could be different; must read with a “mind willing to understand,” which implies considering purpose; cannot ignore context and use to which words are put; patents are actually regulations and should be purposively construed according to Interpretation Act; can work for or against patentee

Key to purposive construction is identification of particular words or phrases that describe what inventor considered to be the “essential” elements of the invention

C claims that vanes should be understood as defined in the dictionary – but this rejects purposive construction; replaces skilled worker perspective with etymologist

2. Application to the caseNo experts interpreted the second patent to include flex vanesThird patent could still be invalidated if too identical to second: test is “identical or coterminous,” which means (1) “same invention”

(not the case here) or (2) “obvious” (not the case here, based on expert testimony)Where one patent differs from another by one feature, tough to argue that the different feature is not essential to the claimC infringed the patentRatioWhat is not claimed is disclaimedFirst step is to construe the claims: antecedent to both validity and infringement considerationsAll aspects of claims construction should be done purposively, seeking the “essential” elements with a “mind willing

to understand” from the perspective of the skilled workerCannot construe patent claims with an eye to either infringement or appellant’s defence to infringement, invalidityClaims construction is a question of law; infringement is a question of factNotes: unusual for accused infringer to argue for broader construction and for patentee to demand narrow interpretation

“All elements” test (USA): more straightforward and easy to understand Begins with the infringing object in mind Breaks down the claim into its parts, its constituent elements (e.g., for a chair: (1) horizontal

platform (2) supported on (3) 4 vertical pillars) If all elements listed are found in another invention (i.e., if every box is checked), there is

infringement “Rule of equivalence” applied to account for slight variations in the elements (e.g., a slightly

sloped platform could be equivalent to the horizontal platform) Caveat in US law: patent prosecution estoppel

o You’re informed that your claim is too close to others, so you limit ito Later, someone comes along and tries to patent something so closeo You’re prevented from arguing that something “close” is infringing the essential

elements, because you’ve already limited your own claimo So: US patent law probably leads to the narrowest patent claims

“Spirit of the invention” test (historic European test, still influential) Words used to describe the invention are an imperfect attempt to capture the inventive spirit of

the invention; we must protect what the inventor actually invented (what’s protected is the invention, not the words)

E.g. Remington razor patented at European Patent Office; suits brought in Germany, Netherlands, and UK

o Germany: patent infringement found; broader “spirit of the invention” test usedo UK: no infringement found; purposive construction gave narrower interpretation to claim

Invalidity

Patent Act, s. 53(1): “A patent is void if any material allegation in the petition of the applicant in respect of the patent is untrue, or if the specification and drawings contain more or less than is necessary for obtaining the end for which they purport to be made, and the omission or addition is willfully made for the purpose of misleading.”

o Not “voidable” but “void”Remedies

o Injunction

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) Powerful remedy; most powerful is interlocutory injunctions Canada has automatic injunctions for generic pharmaceutical manufactures

o Damages (can’t sue for more than one of these) Lost profits to patent holder Accounting of profits (based on actual gain due to use of invention – not what I lost, but what you gained) SCC: you only get the difference between what you got using the patent and what you would have got had

you used a non-patented product (e.g., Monsanto was claiming the value of Schmeiser of the plants – but S asserted that he made no money because of the Roundup resilience, but instead just because he was growing canola no damages)

Overlapping protection with trademark: people have tried to use TM to achieve the same goal as patent

Linoleum Manufacturing Company v. Nairn, [1876] Ch. 834FactsWalton obtains several patents for preparing floor-cloth, which he named “Linoleum” (not previously used)Walton forms LMC, to which he assigned his patentsAfter patents expired, N proposed to make and sell Linoleum under that nameLMC claims trademark in the word, now infringed by N (i.e., misrepresentation that N’s goods are made by LMC)Issue: did N infringe LMC’s trademark in the word Linoleum?Holding (Fry): no NairnDown to present time, no one other than LMC has made “Linoleum”Does not appear that any other name has ever been given to this substanceIf “Linoleum” means a substance that may be made by N, N may sell it by that nameLMC claims that Linoleum bears this name, but the name has always meant LMC’s product – but word means primarily the product,

and only secondarily LMC’s productIf N wants to call its product by the only name that it bears, it may do soRatio: if plaintiff has invented a new subject-matter and uses merely the name distinguishing that subject-matter, but not a name distinguishing that subject-matter as made by them from the same subject-matter as made by others, no infringement if defendant uses that name

Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65FactsKAG makes Lego, for which the patent on the locking system has now expiredRHI began manufacturing and selling similar bricksKAG now seeks protection of its unregistered trade mark, the “Lego indicia” (pattern of studs on top of the bricks) to prevent RHI

from marketing competing products without a disclaimer that they are not Lego action in passing offIssue: can the “Lego indicia” form the basis of a trade-mark for a passing-off action under s. 7(b)?Holding (LeBel, for the Court): no Ritvik Holdings Inc.Patent law protects new products/processes; exchanges time-limited monopoly on use/marketing for disclosure of the inventionTM law focuses on distinctiveness of marketing; goal is that consumers know what they are buying and from whomFoundation of a TM is distinctiveness, because only this allows identification; symbol of connection between source

and productKAG’s patent monopoly was essential for building up and preservation of Lego’s market share; many came to associate Lego with

the locking system of bricksKAG’s alleged distinguishing guise is a set of technical/functional characteristics formerly protected by its patentsRegistration of a TM is not to interfere with use of utilitarian features it may incorporateAct s. 13(2) recognises that it does not protect the utilitarian features of a distinguishing guiseKAG claims that the above is true of registered TMs, but not of unregistered TMs – but registration does not change the nature

of the mark; just grants more effective rights against third parties by facilitating proof of titleKAG claims that former Unfair Competition Act explicitly mentioned functionality, but Trade-marks Act does not, so omission was

intentional – but legislators did not mean to change their intentionRHI’s marketing operations are legitimate; KAG is essentially complaining about existence of competitionKAG’s alleged product distinctiveness consists precisely of process and techniques now common to the tradeRatio“A purely functional design may not be the basis of a trade-mark, registered or unregistered”Elements of a successful passing-off action: (1) goodwill/reputation in respect of distinctiveness of product (not

techniques/processes that create the product); (2) misrepresentation (incl. negligent) creating confusion in the public; (3) proof of damages

Notes: How is this different from Linoleum?

What are the exceptions to the right?o Research exception

Allows someone to use or make the invention in the conduct of research No int’l standard or treaties on this

Europeo Generally, cannot use an invention to do research – but cannot conduct research on the

subject-matter of the inventiono Challenge/murkiness: when doing research

USo No research exception, unless you are tinkering in your basement for purely

philosophical purposeso Exception: research done to meet FDA requirements

Canada: no clueo One case provided a research exception at same time as we had compulsory licenses

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o The compulsory licensing provisions were wiped out “no clue” what the provisions are

now – but they must at least include research for the purpose of seeing if the invention works (i.e., ability to challenge validity of the patent)

o Exception: research done to meet any government licensing requiremento Compulsory licensing

Can impose a license on the patent holder Often deployed as part of competition law, if the patent holder is being anti-competitive If someone tried to negotiate a commercial agreement but couldn’t because patent holder was intractable If we want to allow the sale of pharmaceutical products to countries with health needs

What international protection is granted?o Regional: European Patent (processed at regional level, protection at national level)

Granting done at regional level Infringement actions, research exceptions, etc. all dealt with under national law Technically separate from the EU

o International Paris Convention

National treatment (e.g., US PTO must treat Canadian applicant in same way as US applicant) Not a global standard

WTO – TRIPS International universal minimum standards (e.g., 20-year term) Not a global patent

PCT Coordinate filings in multiple countries File at central office that does preliminary examination; that document is used to file claims at

numerous national levelso If you have an invention, and you want to get worldwide protection, what to do?

Can file simultaneously or immediately in many countries (expensive, resource-intensive) Can file in the US, wait a year to see how good the patent, to save money, and to see how the market is,

and then exercise Paris Convention rights to file elsewhere within 12 months Can file with PCT

File directly to PCT (can do it via CIPO, who will examine the invention using international standards)

o Must still translate it into a national patent, but can push this back 30 monthso 30 months can make a lot of difference: you learn how strong the patent is, etc.

File in one country, and then file within 12 months with PCT

3. Case Studiesa. Case Study 1: Creativity and the Law

Take-home: does our image of creativity match the law? (equally valid answers are yes or no)o There are many reasons for creativity, and IP law doesn’t match all of themo The Lessig piece in Case Study 5 returns to this theme

Gold: no “good” or “right” theory that justifies property, particularly IPThis first case study is thematically related: link between creativity and the lawQuestions of effectiveness of a legal rule, and how far one can use the lawHow does the law relate to follow-up innovation (first generation, second generation, etc.)?How do different theories relate to different patent rules? How are they justified in comparative law?Thomas Jefferson’s first patent statute was designed to protect exceptional inventions – but we see that much innovation is

cumulativeIs IP as constructed trying to impose a vision of human behaviour, or does it respond to our behaviour?

Fisher, “Theories of Intellectual Property”Definition: IP is a “loose cluster of legal doctrines that regulate the uses of different sorts of ideas and insignia”Economic and cultural importance of IP is increasing; scholarly interest has risenApproaches to IP (below) cannot fully explain configuration of contemporary theories

o Important themes not addressed by theorists: custom; privacy interestso Legislative/judicial materials and arguments are blended, while theorists keep the theories separateo Many IP theorists transpose arguments/work from other property lawo All four approaches are less helpful than their proponents claim

utility labour personality social planning

goal maximisation of net social

welfare rewarding the fruits of efforts satisfaction of fundamental human needs

just and attractive culture

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)m

eans balance between creators’

exclusive rights and public enjoyment

market that allows people to benefit from their labour and have their autonomy respected

allocating entitlements to resources in a manner that best enables people to satisfy human needs

active civil society

auth

ors

BenthamLandes, Posner: IP is easily

replicated and enjoyment is not zero-sum; copyists with low production costs deter creators from making socially valuable products must allocate exclusive rights to creators; other ways of empowering creators are less efficient

Landes, Posner on copyrights: reduce consumers’ search costs; create incentives for businesses to produce consistently high-quality services

Locke: Biblical origins of this theory; exceptions are (1) no waste and (2) must leave enough for others

Nozick on patents: acquisition of property through labour legitimate only if other persons do not suffer net harm (i.e., others’ access to invention is limited by patent, but invention would not otherwise have existed) two limitations: (1) subsequent independent inventors must be permitted to make and sell; (2) patents should not last longer than it would have taken someone else to make the same device

Kant, Hegel: will expresses itself through bodily actions; will is thus embodied in things made

Hughes: should protect highly expressive activities and personas; authors should not be able to surrender their rights to some control of their work

Jefferson, Marx, Legal Realists

Netanel: civil society must be nourished by government; incentive for creative expression; support a sector of creative and communicative activity that is relatively free from reliance on state subsidy and cultural hierarchy

whe

re

pref

erre

d

US (incl. US SC)often seen as neutral used

by courts

commonUS SCoften seen as neutral used by

courts

Europe (“moral rights”)less in USA, though

growingeverywhere

limit

atio

ns

Translating “greatest good of the greatest number” into precise standard “wealth maximisation” or “Kaldor-Hicks” (gainers can compensate losers) standard?

Ignores incommensurability of utility functions; defines social welfare too narrowly

Three theories, none of which answers everything

Incentive theory: increase patent duration or strength to where marginal benefits equal marginal costs – but we don’t have enough information to know what is right

Optimising patterns of productivity: sales and license ensure that goods reach those who want and can pay for them – but unclear what activities we should try to adjust

Rivalrous invention: eliminate or reduce tendency of IP rights to foster duplicative or uncoordinated inventive activity – but reducing social waste in one place increases it elsewhere; difficult to determine in advance which inventions “signal” possibilities for improvement

No general theory integrates these three lines of enquiry

Unclear which rationale is used to justify IP unclear that labour theory supports any kind of IP law [Gold: doesn’t apply well to IP, where there is no waste in creation and where taking one idea out of the domain does not leave no ideas for others]

What counts as intellectual labour?

What exactly are raw materials, owned by community, with which individual workers mix their labour to produce IP?

Mixing labour with piece of the commons does not work with IP the way that Locke envisioned it for realty: one acquires only a right to the “original” material, not the idea that one started with not the exclusivity that Locke envisioned

Locke suggested that property rights should last forever once acquired – but most IP rights expire

Proportionality problem: how many rights should you get for how much labour?

Why are property rights the best means of recognising labour?

Must identify which special needs/interests one wishes to promote – and a wide variety can be deemed fundamental

IP rights have economic value, so may contribute to owners’ abilities to shape own life – but such value could be promoted by giving people rights in land or shares in corporations [Gold: hard to explain the entry of our will-based creations into a market transaction]

Conceptions of the self underlying most personality theory are too abstract and thin to provide specific answers to questions

Problem of fetishism: which of many tastes should be encouraged and which should not?

Problem of “the last brick in the wall”: how to reward the last person in a chain of labour?

Justifies patents much better than other forms of IP

Does not explain or address alienation of property

Difficult to formulate a vision of a just and attractive culture – implausible that analysing IP law will give this answer

Difficult to apply a vision to a specific doctrinal problem

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)cr

itic

ism

Doesn’t care about wealth distribution

Allows us to commit immoral acts in search of inventions

Beyond wealth, doesn’t tell us about happiness

Can lead to overly absolute property rights

Often seen as “illiberal” (regulate behaviour) and “paternalistic”

Often seen as “illiberal” (regulate behaviour) and “paternalistic”

Theories (despite limitations) are still valuableo Identify nonobvious attractive resolution of particular problems (e.g., “right of publicity” of celebrities to their

image, etc. was argued in mid-1990s)o Foster valuable conversations: between Congress/courts/administration, between lawmakers/constituents, between

scholars/legislators/judges/etc.Should not try to compel people to accept a particular interpretation; should instead seek to strike a chord of

sympathy in the audience and foster agreement about IP law that wayDISCUSSION: what theory best explains various concepts we’ve studied?

o Théberge: reflects a utilitarian interest in maximising wealth by finding a balance between rightso US approach (“all elements” + doctrine of equivalence)

Best explained by utilitarian theory Focuses on transaction costs: ideal balance can only be determined on object-by-object level, so we need

to minimise the cost of making this determination (don’t have to go to court: can figure out your position by yourself and then negotiate)

o Canadian approach (purposive analysis) Also best explained by utilitarian theory Based on exact scope of right that most increases innovation without preventing users from using the

invention – requires a case by case analysis Willing to absorb somewhat higher transaction costs than the US approach

o Spirit of the invention test Best explained by personality theory Tries to protect the attachment of a person to his work Arguably overprotects the inventor in utilitarian terms Higher transaction costs: must try to imagine what was in the head of the inventor

o Trademarks Traditionally grounded in utilitarianism, in that it reduces individual consumers’ transaction costs – and the

company that can make the best case for exploiting a mark should be allowed to do so Arguably grounded in Locke, in terms of rewarding corporate labour Could find justification in corporations’ personality rights

Stephen & Dennis, “Engineering Time: Inventing the Electronic Wristwatch”Question: what motivates change?Accuracy was long the goal of clock/watch designAccutron became front-runner and only a few companies had the resources to rise the challengeJapan: Seiko

o Smaller start-up trying to compete with established Swiss market; economic motivationso Developed a portable quartz chronometer for the Olympics, and then sought to shrink ito Had no electronics training; had to reinvent themselves; worked by trial and erroro December 1969: first quartz watch sold anywhere, by Seiko, goes on the marketo Improved models followedo Japanese consumers were satisfied with Seiko’s mechanical watches complacent domestic market

allowed Seiko to devote time/money to quarts/effort willing to take on risk of new product that might fail

Switzerlando Effort did not begin with a single established companyo Bauer (President, Swiss Chamber of Watchmaking) saw that a direction change was needed created Centre

Electronique Horloger (CEH); economic motivationso Electronics training and industry did not exist in Switzerland looked everywhere for expertiseo CEH staff faced scepticism and professional jealousy from traditional Swiss watch industryo CEH worked in secrecy, fearing that one shareholder would learn how to make electronic watches and thus

abandon CEH effort in favour of own efforto Swiss mechanical watches dominated world market, and excellence in watch-making was part of Swiss

identity many thought that movement to electronics was unnecessary tension and obstaclesSwiss focus was on consistency (mechanical watches were applauded if they were consistent, even if consistently wrong), while

Japanese digital watch was more accurateUSA: Hamilton Watch Company

o Conventional narrative of technological changeo Clear that Japanese and Swiss quartz analog watches were about to hit the market Hamilton changed course

and tried to build first electronic digital watcho Joined forces with Electro-Data, a spin-off of Texas Instrumentso Produced six prototypes, but design was problematic and far from ready for economical manufacturingo First went on the market at $2100 each (price of a small car)o Won an overwhelming advantage: access to microelectronics know-how and materials generated in Cold

War labsDISCUSSION

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Seiko still doing very well; Swiss companies are OK but doing not as wello Seiko has lots of in-house knowledge that they couldn’t patento Seiko tried to promote an image of being innovative and competitive, at a time when things made in Japan had a

lousy reputationo In most industries, patents have at best a limited influence on innovationo Arguably, 90% of innovation comes from other areas, and 8-10% from IP

Lower in areas like computers: chips weren’t patentable in the 1980s No IP and high growth in this sector because companies were leapfrogging, using each other’s technology

o Different industries and areas have different motivations different contributionso Innovative business models can be key: open-source software is not obviously profitable, but tightly holding one’s

IP rights has not proven to be a successful means of assuring market dominance

Simon, “Creativity in the Arts and in the Sciences”We consider thought creative when it produces something novel and interesting/valuableUsually assign special weight to the opinions of people “skilled in the art”Body of evidence paints a consistent picture of creative processDoesn’t matter if you stand on shoulders of giant; can stand on a sea of dwarvesWhat is important is that creative person has access to rich, continually incremented materials, usually contributed

by many persons, that can be examined, analysed, experimented with, and modifiedEntire process is incrementalCreativity in science

o Faraday as an example: chance without theory varying the situation gradual learning through experiments free of theory development of an accurate descriptive theory

o Impossible to find a single “aha” momento Surprise plays a large roleo Expert problem-solving as a combination of highly selective search through an immense problem

space, punctuated by recognition of (often surprising) features in the phenomena that evoke stored information and turn the search in new directions

o Process of scientific discovery as a cooperation between pattern recognition and selective searchCreativity in the arts

o Also, much searching combined with recognition of patterns of many sortso Design process quite similar to that for science

Bentley, Rodriguez & Gonzalez, “Honduran Campesinos and Natural Pest Control Inventions”Background

o Campesinos (farmers) know about local environment and avoiding pests without pesticides, but also don’t understand many (particularly scientific) things

o Campesinos invent many things, but creativity isn’t enough to deal with new challenges of cultivating fragile soilso Tried synthetic insecticides, but resistance developed and they didn’t know why

Stimulating experimentso Several things stimulate creativity: necessity, new ideas, and the prestige of popular acclaimo 1991: authors began short course on natural pest control; taught ideas about biology and ecologyo 44% of campesinos adapted one of the taught technologies; equal number had invented a new technology through

synthesiso New ecological ideas stimulate inventiono Prestige’s role: we like having our work praised – so authors provided a forum for sharing results stimulus for

creativityScientists can collaborate with people to come up with new, appropriate technologiesDISCUSSION

o Does this show that people are inherently creative?o Does the IP system distort the system by controlling the means and associating them with profit?o There is a step between creativity and making something available; networks and resources are needed to

“package knowledge” – so one way to think about IP is to facilitate not knowledge creation but knowledge dissemination (Moyse: copyright as a right to distribution)

o Maybe don’t need incentive to create, but if we don’t give a right to packages of information, there will be no market for information

o Pharmaceutical industry is not very creative Much of its innovation is in-house, secretive If this knowledge was opened up and shared, with those who wanted access paying a fee, would this

encourage greater innovation? (this would be packaged information, saving others the time required to look for it)

Fennell, “Group Identity, Individual Creativity, and Symbolic generation in a BaKongo Diaspora”Notable continuity in principal facets of BaKongo religion from 16th-late 19th c., resulting from historical dynamics, political strategies,

related effects of indirect European control and Christian missionary strategiesSupplications made to particular spirits when a specialist (nganga) creates physical containers (minkisi) into which manifestation of

spirits (simbi) can be summoned and focussedAny BaKongo could become a nganga if they experienced a simbi’s calling and dedicated themselves to proper use of minkisiEuropean colonisers and Christian missionaries failed to destroy this belief systemBaKongo converted to Christianity and adopted its beliefs very selectively: understood Catholic concepts as translatable into

BaKongo belief in simbi and other spirits; rejected heaven/hell as inconsistent; cross not adopted as a symbol that displaced BaKongo cosmogram, but as a new minkisi

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Blending of cosmogram with Christian cross and other sacraments occurred in many forms, in a way that reinforced,

rather than displaced, BaKongo cosmologyDISCUSSION

o Here, patent law is completely irrelevant; what they’re seeking is beyond those means (it’s motivated by religion)

o Much of our creativity was for a long time religiously motivated

Aronson, “African Women in the Visual Arts”Until late 60s/early 70s

o Westerners thought only true African arts were masks and figurative sculptures – which were produced by meno African women rarely carve wood or work in metal their craft objects were deemed to be of less value; their

crafts were less visible (in the home)Late 60s/early 70s: several studies of women’s artistic roles – but didn’t examine women’s crafts as part of household economy or as

instruments of power within women’s social sphereFunctionalism

o Sees art and other cultural components as working collectively towards harmony and social solidarityo Art can be vehicle by which harmony is maintainedo Does not see art as mechanism of empowerment or male domination no place for gender-related discord in

functionalist’s apolitical view of culturePreservation

o Scholars spend time preserving the “traditional” by gathering and describing field datao Theory – feminist or otherwise – has no place

DISCUSSION o Much of Western women’s work was long not considered cultural or importanto There are whole systems of creativity that are not frequently recognisedo Artisanal skill (“low art”?) is not protected by IP law, where as “high art” is

SO… (DISCUSSION ON THE MATERIAL THUS FAR) With all the reasons described above for creativity, does IP add another reason?Does valuing creativity through an economic right like IP actually detract from the reasons for innovation?

o In Canada, it’s illegal to pay for ova/spermo In many countries, it’s illegal to pay for blood donationso In both of these cases, donation rates are higher where no payment is made – instead of the “gift of life”, you’re

giving $10 donation levels fall only those who need the money donate quality falls tooThe answer to the IP question probably depends on context/time/placeNow, we move from creative reasons to innovate to the social meanings of innovationUntil now, we have assumed that creativity is what the individual “brings”, the “aha moment” that starts and ends with the

individual

von Hippel, Democratizing InnovationInnovation being democratised: users of products and services are increasingly able to innovate for themselvesUser-centred innovation has advantages over manufacturer-centric innovation: users that innovate can develop exactly what they

want, rather than relying on manufacturers to act as their agentsSharp contrast to traditional model, in which products and services are developed by manufacturers in a closed way and user’s only

role is to have needsProgressively easier for many users to get precisely what they want by designing it for themselvesUser-centred innovation appears to increase social welfare (difficult for many manufacturers to accept)Users are firms or individual consumers that expect to benefit from using, rather than selling, a productDevelopment of products by lead users

o Users doing product development and modification in many fieldso Innovating users have characteristics of “lead users” (ahead of majority of users with respect to a particular

market trend, expecting to gain relatively high benefits from developing solutions to needs)o Higher intensity of lead user characteristics greater commercial attractiveness of innovation that the lead user

developsWhy many users want custom products

o Users may innovate if and as they want something that is not available on the market and are able and wiling to pay for its development

o Mass manufactures tend to follow a strategy of developing products designed to meet the needs of a large market segment – but users have a higher heterogeneity of need, and many will pay to get exactly what they want

Users’ innovate-or-buy decisions: factors that can drive users to innovate rather than buyo Agency costs

User wants to preserve its need specification, which makes that user’s solution as high-quality as possible at a given price

Manufacturers won’t find it profitable to develop a product for just a few users Users may overlap their innovations wasted resources, which can be addressed by new institutional

formso Many value the process of innovation

Users’ low-cost innovation nicheso Users and manufacturers tend to develop different types of innovations, due partly to information

asymmetrieso Users usually know need and context-of-use informationo Manufactures often know generic solution informationo Both kinds of information are “sticky” (costly to move from their site of generation)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o User innovation activities are distributed across users according to information endowments; no user is a substitute

for anotherWhy users often freely reveal their innovations

o Social efficiency is increased if users share their innovations, often by unexpected means (“free revealing”)o Often the only practicable option available to userso Private benefits: improvements, mutual benefit, reputation, network effects

Innovation communitieso Important for users to combine and leverage their efforts cooperationo Direct informal user-to-user cooperation is common, as is organised cooperationo Innovation communities are robust with respect to recruiting and rewarding members

Adapting policy to user innovationo Social welfare is increased by presence of innovations freely revealed by users policymaking should support user

innovation, or at least ensure that manufacturers are not overly favouredo IP law often doesn’t have intended effect; can work against policymakers’ intent and disadvantage userso Users and manufacturers tend to build prototypes by modifying products already available – but IP law is often

hostile to this, and should be changedo Innovators’ free revealing is a way around this (happening now in software) will force manufacturers to change

Democratizing innovationo Users’ ability to innovate improving radically and rapidly with improving software/hardware,

tools/components, and access to rich innovation commonso When cost of high-quality design resources becomes lower, can be diffused more widely, alleviating allocation

problems and democratising innovationo Users as an increasingly important source of innovation, increasingly substituting for manufacturerso Manufacturers can adapt: producing user-developed innovations for general sale, selling design kits, selling

complementary productsApplications

o Needs and prototype solutions of lead users typically rejected as low-interest outlierso Systematic searching for lead user innovations can better interface manufacturers with the innovation process as it

actually works better performanceo Toolkits for user innovation and custom design: partitioning product- and service-development projects into

solution-information-intensive and need-information-intensive subtasks, assigned to manufacturers and users (respectively)

User innovation can be linked to information communities and economics of knowledgeDISCUSSION

o We expect product development, manufacture, and sale all to take place within the same organisation/individual – but this is not the case

o Example: 3M initiated a dialogue with customers and developed products based on their needs; these products made relatively more money than in-house developments

o Example: there are currently all sorts of websites that teach people how to customise their software to meet their on particularised ends

o So: we may want to encourage more fair dealing exceptions and less strict IP laws so that we can increase social welfare and promote innovation

o IP law can be seen as a fortress, protecting those inside – but if von Hippel is right, this model does not correspond to how innovation takes place in a real-world context

o Even those industries most associated with the fortress model (e.g., pharmaceuticals) are starting to shift towards other business models and structures

o Gold: when all that an industry (e.g., record industry) can hold onto is its IP rights, it’s time to pull your money outo Gold: people do what they want, regardless of what law says – so businesses need to adapto The rhetoric we hear may not be followed up with real action

Some organisations would rather have their product stolen than sold in all cases, so that they can secure market share – i.e., it’s in Microsoft’s interest to accept that some people pirate its software, because then everybody’s using Microsoft – so it wouldn’t be to Microsoft’s advantage to follow the record companies’ enforcement model, despite their protests about IP

Film industry has little incentive to chase down DVD pirates in Thailand – but it’s cheap for them to let governments impose more regulations

o Businesses might be misconstruing pirates’ motivations and markets: we may watch pirated movies by ourselves, but we rarely watch pirated movies with friends – just as we go to restaurants for the social value of it, instead of cooking at home

o Von Hippel’s model doesn’t necessarily apply to certain industries – e.g., biotech, where safety concerns and clinical trials pose barriers

However, most such trials in the US are paid by insurers or public funds – so why not innovate and create public/private partnerships?

Gates Foundation is currently investing in philanthropy as regards HIV/AIDS drugs clinical trials

Adarves-Yorno, Postmes & Haslam: “Creative Innovation or Crazy Irrelevance?”Norms influence what is perceived to be creative and guide creative behaviourCreativity can be understood as the product of a social system, not just the product of an individual or group with particular abilitiesTraditional assumption is that creativity is defined by intrinsic properties of the creation (e.g., novelty and appropriateness) – but

these are context dependentRecognition of someone as a creative genius is less contingent on actual achievements than on social consensus about their

contributionCreativity also achieved by deviating from normative criteria: when and why is determined not just by content or kind of value, but

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Social identity perspective: individuals have a personal identity and a range of social identities; salience of social identities induces

conformity to in-group norms; salience of personal identity induces contrastive comparison of self with these normsWhere social identity is salient, perceptions of creativity are assimilated with in-group norms; where personal

identity is salient, creativity is contrasted with the normGroup norms impact not only creativity displayed by groups but on creativity of individual group membersBy manipulating people’s practice and their perceptions of what is a good way of expressing themselves, creativity

can be channelled in particular directionsCreation is a dynamic process in which individual and social-structural factors interactCreativity does not depend solely on the intrinsic properties of the creationDISCUSSION

o So you can only judge creativity in the location and context in which it occurso Questionable whether such contextual distinctions will remain as the barriers between cultures break down –

though this may just create a larger in-groupo How does this notion interact with ideas of genius, which seems to be a stand-alone concept?o Many of the greatest scientific achievements were rejected when they were made, because they did not comply

with community standards; it was only much later when minds and ideas had changed that we judged certain individuals to be particularly creative and/or to be geniuses this may confirm the idea that creativity in particular circumstances can consist of breaking with group norms

o Are we conflating creativity itself with the value of creativity?o IP is designed to protect creativity, but effectively only protects creativity that is “worth protecting”o Relationship between IP and development (see also Case Study 5)

Almost all developing countries through history have offered weak IP, as an effort to have access to other peoples’ knowledge at a low cost level of IP rights tends to correspond with level of development

It’s a chicken-and-egg game with IP and development (like free trade, which you don’t want until you’re strong and developed)

o To the extent that knowledge is socially creative, and that the creative process is socially conditioned, what happens to the notion that we generally talk about of the “author”?

o IP law still continues to think in terms of a single “inventor,” even if that inventor was just the last person to put a brick in a very large wall

Fried, “Wilt Chamberlain Revisited”Nozick’s Wilt Chamberlain example: WC (basketball player) won’t play unless those who want to see him pay a quarter to do so

would be unjust for that transfer to be taxed, because we’re taking away his decision-making power (he only wanted to play for the value he demanded)

Nozick asks by what process a transfer among two persons could give rise to a legitimate claim of distributive justice on a portion of what was transferred, by a third party who had no claim of justice on any holding of the others before the transfer

Criticism: initial right to property does not carry with it absolute right to transferDeeper criticism: unclear if each party has a right to the full market value of the asset she holds the moment before

the exchange, and if so, whether she has a right to transfer it as a gift or on exchange“Right Locke” would say that labour theory generates ownership absolutely protected from the state“Left Locke” would say that entitlement is to portion of property corresponding to actual cost plus fair return

o State as the “silent partner” in every business enterprise, and can take its rightful share through taxationo Taxing increase in value as it occurs is difficult, because valuation is difficult when property doesn’t change handso So: “realization requirement” (decision not to tax appreciation in value until assets actually sold for cash) is a

choice, and does not change the fact that state could tax it earlier if it wishedo Same holds for inheritance taxes

DISCUSSION o Nozick as the modern-day Locke, trying to secularise and adapt Locke’s ideas to the modern dayo Nozick’s WC example is comparable to IP rights: innovators argue that they deserve a property right in the idea

because but for them the idea would not be there, and no one else can force them to contribute to the community interference with IP rights is unjust

o But the value in what WC is doing is the product of a society that’s invested in the culture that values his work; his natural talent is only valuable in that community no reason for him to get everything

o IP rights holders demand that their rights should be absolute because they’ve expended the energy (contrary to CCH’s rejection of the “sweat of the brow” theory) – but community members may equally argue that they’ve contributed to the culture that rendered that innovation valuable

Dennet, “Memes and the Exploitation of Imagination”Genes arguably use us to reproduce, but have an incentive to do so selectivelyGenes do not have the monopoly on the natural selection procedure – ideas (memes) survive the same wayMemes: smallest elements that replicate themselves with reliability and fecundityMemes propagate by moving from brain to brain through the process of imitationReplication as not necessarily of the good of anything, but rather for replication’s sakeNo necessary connection between meme’s replicative power, its “fitness,” and its contribution to our fitnessMany of the memes replicate not just with our approval, but because of our approvalMemes are potentially immortal, but existence depends on physical embodiment in some medium if all embodiments are

destroyed, meme is extinguishedMemes may spread just because they are good replicatorsBrute physical replication of vehicles is not enough to ensure longevity; each mind has a limited capacity, so there is competition for

entry“Linked loci”: memes may be physically tied together and thus replicate together; may thus be mis-filteredWe could on the good ideas making it through our filters into our minds

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Competition to break through filters leads to increased intensity of efforts more “advertising”Some memes inspire positive feedbackMemes provide considerable advantages, and explain our competencies and chances just as much as biology does

b. Case Study 2: Myriad GeneticsTake-home: you cannot analyse the effects of the law without knowing what people are actually doing about it

o Behaviour of institutions and individuals combines with, adjusts, and affects the lawo Why are so many industries so glued to current models?

This continues the discussion we’ve been having about why people create and what the patent system adds to this processo This is a lively academic debateo Difficult to say in most cases whether something has not arrived on the market because of the IP system

Gold & Carbone, “Myriad Genetics: In the Eye of the Policy Storm”Introduction

o 2 primary concerns with gene patents: (1) appropriateness of granting commercial rights over human body; (2) whether patents on human genes stifle research

o Myriad patented one of the first genetic tests for breast/ovarian cancero Test identified presence of a gene that increased likelihood of cancer occurrence (NOT determined occurrence)o Many scientists involved in initial stages; M eventually obtained patents over genes, mutations, and associated

diagnostic test

Facts/backgroundDiscovery/invention

o Early 1980s: early stages of genetic research; searching for “the gene” for certain diseaseso Research in many labs looking for the gene for breast cancer, and they had a reason to share despite their drive for

funding sources etc. collaboration and competitiono Intense competition between research teams led to identification and sequencing of BRCA1 and BRCA2 genes – but

also formation of Int’l Breast Cancer Linkage Consortium to compile later-stage research Marie-Claire King (UC Berkeley) announced that she’d identified a gene somewhere on Chromosome 17

increased competition because of increased focus One researcher (Skolnick at University of Utah, later at M) wasn’t too interested in breast cancer, but had

access to legal database materials and wanted to use/test them Another (Stratton) in the UK was working on this as well Each is trying to isolate part of the gene

o Stratton publishes an article in Science detailing the discovery of this geneo The day before publication in Science, Skolnick’s group in US files a patent claim on that geneo [So: no prior art; grace period applies only to your own prior revelations, not any other disclosure publication

here as an absolute bar to novelty]o Once M had 9 patents on BRCA1 and BRCA2, gained control over diagnostic tests based on these genes

DISCUSSION: why doesn’t the mere submission of the article to Science count?o It’s “distribution” or “availability” to the public that counts hereo Even if you hand out three copies to random people in the street, that counts as distributiono So why does giving it to these people count, when giving it to Science does?o Science is bound by confidentiality; trade secrets arise by explicit agreement or by concepto Here, context is at issue: when you submit to a journal, confidentiality is part of the dealo To have the patent system function, you need trade secrets – so that you can disclose to patent officers,

etc.o So: as of date of publication, there is prior art

DISCUSSION: doesn’t it seem quite coincidental that Myriad filed its patent the day before a study was released – a study that he didn’t know about?

o Skolnick insists it was coincidence; his reputation sufferedo Unclear why Stratton didn’t file its patent earlier (Gold is looking for info on this)o For scientists like Stratton, publication is the key (prestige, prizes, etc.), not patent – and his funders (Cancer

Foundation), not he, held the patent (and their priority was getting the info out, not patenting it)o Skolnik’s priority was different – he wanted to make money, and was thus able to concentrate on the patent

Patent claimso Myriad filed first through US; then claimed through PTE, seeking patents only in developed worldo If a test showing that someone had this gene, they went from the normal background risk of 12% for breast cancer

to a much higher figure – so not worth it to patent in the developing world, where a test showing increased probability of a future disease isn’t too relevant when people’s immediate health needs are not met

o (See patent claims in our handout) In US: only allowed to claim a single invention Canada: rules are less strict can have fewer patents to cover the same area European: in the middle

DISCUSSION: M’s patent claimso M patented the gene in an artificial setting

Cannot patent a gene as it exists in your body (that’s discovery, not invention) M thus patented an isolated gene Can patent something naturally occurring if it meets other criteria (e.g., usefulness) – so penicillin is

patentable in terms of its antibiotic properties, but not in terms of its existence

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) As a molecule, it is difficult to object to M’s patent on this gene – but we care about this gene because it

conveys health information (we don’t care what the gene says, but whether you have a higher risk of cancer), so the patent in this case arguably restricts information (because genes are for now the only source of this information), rather than promoting it as patents are supposed to

But courts have held that DNA is a molecule (not information), and is thus patentableo M also patented its process

Reading this particular gene at this particular point in the chromosome for this particular reason All elements need not be novel; novelty is located in the process itself – despite that gene sequencing

itself was common knowledge by the time M ran into difficulties Testing this gene requires reproducing the gene – which infringes the patent

o Cf. patenting the measurement of a person’s weight Patent system considers this acceptable, if description challenges are met It is, however, an informational issue – and people would have no other ways to measure their weights

DISCUSSION: does the altruism element matter?o Skolnick went the commercial route, but his goal was to provide top-level clinical serviceso Stratton was working to get academic credit, but his goal was to provide services to women

DISCUSSION: is the patent system providing an extra motivation, or substituting a motivation?o For all we know, Skolnick might not have worked so hard if there was no possibility of patento Others will say that without a patent system the stuff would have been invented anyways – though perhaps

released to the public one day latero With no patent system, this gene would have been fully/disclosed anywayso So is it worth it to buy a patent?o This winner-take-all system means that people are willing to be inefficient resources are wasted to

acquire speedDISCUSSION: use of public funds

o During this process, Skolnick had “spun out” his research business to Myriad – but University of Utah (under Baye-Dole Act) held his IP rights from when he was there

o So: large public investment in building this database, which when it gets ripe is moved to Myriado Is this a proper use of public money?o If the University (a public organisation) still had the IP rights, would it have done the same thing?o Canadian taxpayers supported the work of the Canadian on the team – why should a private company end up with

all the rights?o Does this mean that the taxpayers are paying for both the invention and the eventual treatment (i.e., are we

paying twice)?o Counterargument: somebody has to support the risk of this; when you buy it the second time (treatment),

you’re paying for that business risk (including salaries, training, delivery, etc.)o Most patents are not commercialised, and those that are often don’t make money

By the late 1990s, genetic tests for breast cancer were being run in many countries

M’s business modelUSA

o M built a high-tech lab in Salt Lake City with high throughput capacityo M began marketing 3 principal diagnostic tests in the US for proband (i.e., full-gene) sequencing; anticipated that all

proband testing would be done at their Salt Lake City labo Anticipating that relatives of women testing positive would want to be tested too (10 for every positive proband

test), developed single mutation testing as well, at one-tenth the cost of proband sequencing; anticipated outsourcing this testing to local labs

o Hired communication team to promote; began to train physicians; began direct-to-consumer advertisingo Other labs had begun to perform BRCA1 and BRCA2 tests as well; M sent them cease-and-desist letterso So: M’s advantage lay in network of health care processionals, service providers, and insurers; wanted to be the

laboratory for genetic testing; secured this position with patentso Single mutation testing didn’t follow a 10:1 ratio as predicted, but rather 2:1 (exception: Quebec)

Internationallyo Attempted to replicate what it saw as a successful US model – and had to outsource since they had few staffo M’s preferred model was, again, to conduct all pro-band sequence analysis at its Utah laboratory and to license out

single-mutation sequencingo M didn’t realise that it had entered into a storm about patenting, genetic testing, etc., and that outside US its

patent rights would prove far less effective at guaranteeing success

Clash with other normsIntroduction

o M didn’t consider policy realities surrounding health care delivery, mainstream opposition to gene patenting, hostilities towards it from scientific race

o In countries with public health care systems, M had to approach purchasers (the health care systems themselves); policy climate even more hostile; M was proposing a new technology commercialised in a novel way, requiring public providers to give up some control

o In Canada, M made situation worse by granting private company (MDS) exclusive rights to market the test engaged Canadian hostility towards private-sector delivery

Clash with scientific community normso Scientists worried that rise in patenting could hinder research because of anticommons problem (inability to use all

necessary inventions) and blocking patents (unaffordable critical technology)o M entered in an aggressive manner; researchers thought M would enforce its patents against them if they pursued

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Outside researchers thought M was willing to block research to make a profit; many scientists worried about

contributing own research to databases for fear of providing evidence of patent infringemento M denies that it blocked research use of BRCA1 or BRCA2, but others felt blocked from developing more

comprehensive or accurate testso More general concerns: if only patent holder can perform genetic tests, difficult to train next generation of

geneticists to perform pro-band testingo Several European researchers launched opposition procedures against M’s patents; generally successful but now

under appealo Additional concern: M’s database would grow as it tested more samples in Utah, giving it a future unfair advantage;

M insists that it never intended to build a private mutation databaseClash with clinical community

o Clinicians worried that (1) M was making test available to all who wanted it, even if there was no clinical justification and (2) direct-to-consumer advertising would increase demand for test amongst low-risk populations

o Risks of testing: psychological ramifications; insurance discriminationo Clinician groups had developed strict protocols as to who was eligible for the testso For health care systems, NRCA testing was just one element in a complex set of services and patent management,

while for M it was a unique serviceo Appeared to clinical community that M was only interested in selling testing serviceso M tried to train physicians in counsellingo In fact, counselling did rise and patient awareness did too, but no huge increased demand for the test – though

there was a “bottleneck” in referral system because more women were seeking counselling M decided against national advertising

o Studies showed that there were sufficient checks within US health care system to ensure that only at-risk women were tested

o M’s data showed that women were not being put at unnecessary psychological riskPatient concerns

o Concerned that M could violate privacy by building a database of genetic materialo Concerned that M’s practice of offering genetic tests to particular ethic groups could create discrimination

Health care administrator concernso When these people entered the debate, M encountered serious difficultieso USA

No legislative changes; no increased regulation Little thought given to intersection of gene patenting and genetic tests But growing sentiment that too many ideas with negative effects on scientific research were subject to

patent rights legislation introduced in Congress failed NIH drafted non-binding guidelines on when grant recipients should apply for patent over genomic

invention and manner in which licences should be granted So: US government did little to limit M’s ability to commercialise tests

o International concerns M sought an intermediary in each region that it could license (for follow-on testing, with pro-band testing

reserved to M in Utah) M tried to internationalise its US strategy without accounting for policy debates in national

health departments and research institutions Int’l policy community was struggling with how to ensure appropriate introduction of new genetic

technologies into health care systems, and how far they should be patented Overarching question: how to administer new genetic tests to both ensure access and universal coverage? Canada

Some provinces offered BRCA1 and BRCA2 tests on research basis Testing services existed; policymakers started to examine implications of new genetic

technologies M was thus perceived as disrupting a system, not just introducing a new test M knew little of policy discussions, didn’t know how public systems worked, and its President had

disdained public systems Financial constraints (decreasing federal transfers) made governments slow to approve

introduction of new tests to be covered by provincial insurance MDS saw self as supplementing, not competing with, public system ON gov’t funded BRCA1/2 genetic tests, but not M’s full-sequence test M wanted licensee MDS to approach provincial governments to negotiate introduction of M’s test;

MDS saw role as advisor and wanted M to approach government directly MDS later backed away from the test

So: lack of clarity between M and MDS may have contributed to later problems ON had experience in buying test kits, but none in outsourcing genetic testing – in an era of

growing “genohype,” this looked like the tip of the iceberg – and didn’t save surgery/treatment costs or displace other services in the short and medium terms, particularly given contemporary financial constraints

ON realised that M’s model wasn’t just more expensive but challenged ON’s model of service provision

Policy branch realised that any agreement with M would set a precedent (current physician-recommended testing in combination with genetic counselling was likely to change) delay

M and MDS had no idea of policy unit’s concerns or why there was delay decided to escalate MDS didn’t want to be perceived as aggressive (needed to preserve relationships with provincial

systems), but didn’t communicate well with M M (frustrated by non-response) sent cease-and-desist letters to QC, ON, AB, BC, who thought M

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) ON Health Minister made statements against M’s actions M responded with threats, which

hardened ON’s position and undermined its perception of M’s credibility Political context (concerns over US intervention and private delivery) ON couldn’t be seen

as giving in to M Media exposure was negative towards M: condemned private sector “incursion” DISCUSSION: was M right at this point?

o Legally, M was correct that its patent was being violated (and as a small start-up still losing money, it was both desperate and naïve)

o From their point of view, they’d heard nothing for six months – and meanwhile, the government (through publicly funded labs) was violating its own patent law with respect to M’s patents

o But in fact ON wasn’t infringing the patents The labs were, and the labs are not controlled by the government, though they

were arguably funding the labs in order to incite infringement Funding someone isn’t enough to ground liability for infringement The labs weren’t solely designed to run these tests

o So why did M sue ON instead of the labs?o When ON said “we’re not infringing,” they were likely purposely ambiguous as to

whether it wasn’t they that were violating, or that there was no valid patent to violate ON convened stakeholders and wrote report calling for reform of Canada’s health technology

assessment process to better assess quality/efficacy of new technologies and calling on Canada to reduce negative impact of gene patents on research and patent administration

ON did not suggest invoking compulsory licensing (too drastic), waiting instead for M to commence infringement action

Other provinces supported ON Industry Canada’s Patent Policy Directorate didn’t question M’s patents or address patent

concerns; Health Canada was sympathetic to provinces ON + Health Canada in tension with Directorate, which demanded exact evidence of patents’

effects Discursus: evidence of patents’ effects

o Little evidence is availableo Most suggests that basic research would occur absent patent rightso Less clear on whether anyone would perfect technologies and market them

without patentso Unclear as to how much patents on existing technology obstruct new research

and access to technologieso Specific workings of patent system with respect to genetic technologies are

even more unclearo Unlikely that we will ever have a clear answer to how patents actually work to

increase/decrease research, commercialisation, and access SARS + Iraq + ON election + media losing interest + no enforcement action from M lowered

priority ON and Directorate continued to spar requested Canadian Biotechnology Advisory Committee

to write a report on interaction between human gene patenting, health research/development, and provision of health services recommended research exception and opposition procedure

M decided to give up on Canadian market Canada still hasn’t altered its position of ignoring M’s patents as well as general issue of

interaction between human gene patents and public health care system Europe

Same problems as in Canada, made more intense by rivalry between M and European researchers difficult to find licensees

M soon gave up on European market Various institutions challenged M’s patents Challenges to patenting genes came from the left and the right France

o Initially didn’t respond, as local researchers were hostile and because Jospin’s government changed priorities changed

o Gov’t encouraged clinics to challenge M’s patents, but didn’t get involved itself wanted to send signal of strength in licensing negotiations

o Worked on expanding compulsory license regime to cover diagnostic test Australia

M entered Australian market through partnership with GTG Gov’t increasingly became interest in effects of new genetic technologies focussed on M’s

patents Japan was a different experience, because few Western genetic tests are relevant and genetic testing is

more regulated (clinical trials are mandated) Myriad licensed its local provider to do everything (proband and follow-up tests)

o International arena Soon affected int’l debates on human gene patenting M and patents were not initial cause of any specific thread, but heightened debate and spurred countries

to act OECD began to look at question of human gene patents

Suggested that IP system as applied to genetic inventions functions as it should No systematic breakdown in licensing of inventions

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) Gene patents might cause problems in specific areas (incl. genetic testing), as illustrated by M’s

business model Developed guidelines on licensing genetic inventions

Governments wanted to insure that universities/companies would not license gene patents so as to prevent research or access; industry wanted to avoid a legislative response; all wanted to treat M as a rogue actor

Only Canada started to implement OECD guidelines M was branded a black sheep, but actually agreed with OECD guidelines and said it had always conformed

with them

AnalysisPublic record strongly condemns M – but solution could likely have been found through communication, trust, partnershipFailures

o Communication failures M failed to communicate its position clearly (if its position was indeed clear) M failed to explain its role in sequencing of BRCA ½ and its claim to victory in patent race scientists

thought M was being secretive because of how discoveries were announced, and chronology of patent application

M interacted poorly with research community, despite being ready to accept that scientists could conduct research and was flexible about licensing let others believe that it threatened ongoing research

M was not transparent in relation to commercialisation strategy, instead trying to market its product like any other commercial product policymakers thought M was unwilling to meet their needs, to integrate its product into public systems

M failed in communicating with research and clinical communities Communication is not only conveying information, but understanding context of communication – but M

did not educate itself about policy context M was not only guilty party: Canadian provincial and federal governments were not open in their strategies

about private involvement in public health care system Once M’s pressure tactics were publicised, provincial governments had little room to manoeuvre because

media framed dispute as a case of privatising health care (anathema) Industry did not communicate well So: communication failures hardened positions before negotiations, Canadian governments’ hand

forced, unpalatable to be seen negotiating with private sector, missed opportunities to resolveo Institutional failures: Canada

Federal and provincial governments battled over who was responsible for addressing the problem: provincial governments bearing public ire over reduced health services and unwilling to consider increased privatisation more expedient to shift burden/blame to federal level, where patent reform does not win votes and political climate was not conducive to change

Health Canada and Industry Canada battled over jurisdiction Directorate wanted to throw issue back to the provinces by making unattainable evidentiary requests

instead of confronting patent reform standoff No one had sufficient jurisdiction over all aspects of the M controversy, and everyone had reasons to avoid

acting If Directorate had seen own role as guardian of integrity of patent laws, dispute would have been shorter;

introducing a statutory research exemption would have provided common ground with M and built a foundation for further negotiations

Split competence between Directorate and CIPO didn’t helpo Lack of trust

Competition undermined cooperation, leading to accusations of unethical practices spread to policy communities

M led negative public opinion fester rather than confronting the issues All relevant actors assumed that M would pursue researchers working on BRAC1/2 genes researchers

withheld information from public databases M came to distrust policymakers, assumed that ON would not respect its patents played hardball

Law vs. practiceo Legal arguments (all mischaracterisations of the law)

“Human genes cannot be patented because they are discoveries rather than inventions” Patenting genes

o Patents on genes have been issued for years in many OECD jurisdictionso Human gene may not be an invention in ordinary sense, but is under definition in patent

law (owes existence to inventor)o Exact standards vary between countries, but US, Canada, Europe, Australia, and Japan

have rejected argument that genes cannot be patented because they are found in nature determined that isolating a gene, purifying it to identify its function and identifying mutations involve sufficient human intervention to justify calling it an invention and patenting it

Scope of gene patentso Critics claim that scope should be limited to particular function that inventor described in

application M’s patents would have been restricted to those mutations it knew about at the time, and the particular form of test used

o Instead, patent was broadly construed as covering the entire gene and any diagnostic procedures

o (Reviews three camps of construing claims: essence, purpose, essential elements; discusses fire wrapper estoppel in US)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Patenting of a gene covers all uses of that gene without limitation to any particular

process of purification/isolation or to function/intended useo Each country has own means of interpretation, but scope of patents is generally quite

broad Patenting genetic tests

o Europe and Japan exempt diagnostic method from patents – but exemption does not cover genetic tests

o US, Australia, and Canada grant patents on diagnostic procedures (though Canada not on treatment methods)

“M’s business practice violated competition laws” Critics claim that M’s licensing practices abuse its dominant position, contrary to competition law Patent law generally governs if patent is awarded and scope of patent, but competition law

governs whether those rights are used fairly Mere fact of having a statutory monopoly (i.e., patent right) does not necessarily lead to violation

of competition law Canada: exercise of patent right to exclude others is not itself anti-competitive; licenses only anti-

competitive if they reduce competition in other products that would not have been limited absent the license

US’ similar approach: test is whether license’s pro-competitive impact (making invention available to others) is outweighed by negative impact

Generally: as long as license doesn’t prevent competition that would have existed absent the license, no violation of competition law

M’s transfer of exclusivity to its licensees did not create any “extra” exclusivity acceptable “M’s practice of requiring patent samples to be sent to the US violated privacy laws” – but in sending a

sample, patient accepts lower level of legal protection offered in US So: focus on legal rights is misleading, as they were less significant than business and gov’t

norms This is not a dispute about compliance with the law

o Clash of norms and practices M pursued traditional commercialisation strategy – but didn’t recognise that genetic test for

breast cancer is not like other products (no “traditional” market: patent requires substantial counselling; test is complex)

New test had health implications but also fairness and gender equality implications issues of availability and accessibility, problematic because of M’s business model

Different goals: outside US, purchasers were not individual agents, but publicly administered health care systems whose goals were cost-efficient intervention across populations rather than individual benefit

M’s tests posed two problems: high cost (worries about precedent; gov’t wanted to control costs by establishing criteria about value and efficiency); M’s sales strategy presented its test as a take-it-or-leave-it situation (but gov’t wanted more supple options)

So: clash between way M structured its commercialization efforts and public health administrators’ need for flexibility in introducing an implementing suites of health care services

Many scientists think that genes are at too early a state of scientific development to be patented Many scientists think M’s actions were the last step in a long process of scientific effort no right to reap

full rewards of patentingLaws, practices, and institutions all affect how IP rights play out

o On paper (i.e., legally), M could block anyone from providing genetic tests for breast/ovarian cancer – but reality was that existing practices/institutions would not support more aggressive enforcement

o Practices Standard business practice allows researchers to conduct research without fearing enforcement against

infringement Not in M’s interest to prevent researchers from conducting research (wanted to increase knowledge stock) Not in M’s interest to enforce against provinces (high costs, small market, risked ruling that its Canadian

patents were invalid, MDS wanted long-term relationships, risk of poor public perception) Funding of biotech research impacts how it is brought to market: public funders usually attach

availability conditions; private investors want to patent whatever they can; Skolnick’s research was originally publicly funded but then went private conflicting imperatives

o Institutions Each country has different institutional structure debate around M’s patents followed different

routes Responsibility for different aspects of the controversy normally distributed across several departments

managing a coherent gov’t response is not easy OECD was well placed to be an interlocutor: perceived as nimble; works through “soft law”; has biotech

expertise; has more credibility with industryo Need for empirical evidence

Lack of institutional mechanisms to gather knowledge about effect of patents on biotech innovation, research practices, and delivery of health services

Theories abound, but few empirical data on how patent system works and affects health care Most data come from opinions Policymakers must consider beliefs, attitudes, and perceptions Real fear among clinicians that patent holder will prevent them from researching often self-

fulfilling Lack of empirical evidence is no excuse for governments to refrain from acting

Politics and ideology

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Layer on top of laws, practices, and institutionso US (private system): concerns over quality of services; religious concerns over gene patenting; belief that gene

patents stifle research/developmento Europe: concerns over quality of tests; counselling requirement/availability; high costo Canada

Federal-provincial relations; ability of health care administrators to introduce new technologies; cost In Canada, provinces ignoring M’s patent pressure on M and on federal gov’t

o Sense in many places that health administrators should not submit to will of a US companyo Much dissatisfaction with how M didn’t “deserve” its patentso Countries should consider what they hope to achieve through their patent policies, and then adapt

patent laws to best facilitate these goalso Instead, countries have dealt with patent law as a technical matter unconnected to overall health, industry, and

agriculture policies

Nuffield Council on Bioethics, “The Ethics of Patenting DNA: A Discussion Paper”Do diagnostic tests based on DNA sequences meet the legal criteria for patenting?

o Arguable that what is claimed as an invention is the fact that an association exists between a gene variant and a disease; knowledge of gene’s biological function unnecessary for diagnostic application, so this is no more than a discovery

o Most countries’ law requires application of discoveries to be regarded as inventions if they are useful; maybe in public interest that discovery/invention are blurred – but where discovery is routine and prospective use is speculative, patent holder may be rewarded incommensurately with contribution

o Isolation of BRCA1 was essentially a discovery with a useful applicationo Now that human genome has been sequenced, isolation of DNA sequences and identification of

association with a disease are more straightforward not inventive should not be patentableDoes the granting of patents on diagnostic tests based on DNA sequences cause adverse effects?

o “Inventing around” is harder with genetic material because there are no alternatives to DNA sequenceso Excessively broad patent creates a monopoly and reduces incentive to develop other tests can inhibit cost-

effectivenesso Difficulty in developing alternatives that do not infringe the patent is serious current monopolies are too

broado Broad patents in this area can also restrict other forms of research; over-early gene patenting can limit other

researchers’ freedom maybe need remedial actionAre patents on diagnostic tests on DNA sequences needed?

o Argument for patents: incentive for invention/development – but patents have not always been vital in other areas of diagnostic testing – but relative to medicines, developing tests is easier

o Argument for patents: otherwise private-sector investment would decline in this vital field – but other approaches could offer inexpensive rapid predictive knowledge (can patent technologies, rather than information)

How should the system be amended for the future?o If unchanged, patent system will have deleterious effects on diagnostic testso May need patents to protect areas where significant effort is requiredo Should stringently apply current criteria to applications for product patents that assert rights over

DNA sequences for diagnostic useo Concerns that patenting one sequences would give exclusive rights to all subsequent uses of ito Could define a use patent so that holder is entitled to rights only to use of DNA sequence for specific diagnostic

test for diseases in question (rather than all tests for the disease) incentive for company to develop tests and other companies to develop other tests

Should compulsory licensing be required in relation to patents that have already been granted?o Compulsory licensing rarely imposedo More important issue is whether invention meets eligibility and patenting criteriao If diagnostic tool is only available from inventor at high cost, and inventor is unwilling to license, compulsory license

may be only optiono Critics claim that compulsory licensing will reduce incentive, encourage secrecy, lose benefits of patent system –

but if current system is adversely affecting society, compulsory licensing is worth ito Must strike balance: compulsory licenses only where existence of monopoly is creating unacceptable and unfair

situation; guiding principle is that patent protection should be commensurate with contribution made by inventoro Mere threat of compulsory licensing is sometimes sufficient

Caulfield et al., “Evidence and Anecdotes: An Analysis of Human Gene Patenting Controversies”Introduction

o Concern over gene patenting has rarely led to reform proposalso Policy activity largely stimulated by social unease, emergency of preliminary data, literature, and high-profile caseso Concern over “tragedy of the anticommons” (large number of gene patents would make it difficult to acquire

rights to all necessary research inputs underuse of technology)o Concern that owners of patents on fundamental technologies will exercise rights such that others cannot

develop/access the technology (genetic patents cannot be easily invented around)o Concern that commercial incentive built into recent policy changes + pro-commercial ethos in universities will

undermine norms of open scienceo 2001: these concerns + Myriad controversy led to policy activity

Reflecting on the evidenceo Anticommons effects not borne out by data

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Upstream research limitations have more to do with willingness to accept market price and access

terms than with patentso Exception: patents on diagnostic tests; more instances here of claims that patent owner is asserting

inappropriate exclusivityo University researchers becoming more secretive and less wiling to share – but unclear if patents are the causeo Commercial activity, scientific competition and cost/effort all affect open scienceo Industry funding often associated with delayed publicationo May reflect changing incentives as researchers move towards less encumbered research areas loss of people

working on a particular problem, but benefit from people working on more problemsAnalysing the concerns, evidence, and anecdotes

o Myriad case showed potential for a high-profile controversy to mobilise governments and non-governmental policy maker

o Data about diagnostics cannot be generalised to other useso Few similar controversies five years later (maybe Myriad has had chilling effect)o May be conflation of patenting and commercial competition as the cause of the trend towards secrecyo Solution may not rest in modifying patent policy

Conclusionso Strengthened research exemption unlikely to address anti-commons or restricted access problems,

especially in diagnostic testingo Combination of lack of empirical evidence + mismatch between problems and solutions may explain why there has

been little policy changeo Policymakers may be responding more to high-profile anecdotes or arguments with high face value than to

systematic data on the issueso Myriad and other cases may have sensitised administrative and funding agencies, and patent holders, to possible

adverse consequences of overly liberal patent granting

Gold et al., “Gene Patents: More Evidence Needed, but Policymakers Must Act”Few firm conclusions can be drawn about positive or negative effects of patents on innovationNo clear idea of relative effects of patents or alternativesIn many places, availability of public health care systems, and cost-effective and socially respectful implementation, have been a

priorityNothing inherently wrong with policymakers formulating policy based on limited evidenceInterventions of policymakers may have had mitigating effect on the emerging problem by sensitising actors to need for caution in

granting patentsResearch exemptions predate any debate about the anticommons and apply further afield than biotech – the are part of the balance

between existing inventors, future inventors, and the publicNeed more research on the anticommons

Madey v. Duke, 307 F.3d 1351 (headnote)RatioExperimental use defence is narrow and strictly limitedUse does not qualify for experimental use defence if undertaken in “guise of scientific inquiry” but has “definite, cognizable, and not

insubstantial commercial purposes”Use that is in any way commercial in nature is not immunised; nor is conduct in keeping with alleged infringers’

legitimate business, regardless of commercial implications

Walsh, Cho & Cohen, “View from the Bench: Patents and Material Transfers”Madey v. Duke clarified that there is no general research exemption shielding academic researchers from infringement liabilityBiotech patents not typically used to restrict access to knowledge that biotech scientists require; few scientists pay attention to

others’ patentsScientists not stopped by existence of third-party patents or post-Myriad hysteriaFor now, existence of patents does not inhibit biotech research”Law on the books” need not be the same as “law in action” if the law on the books contravenes a community’s

norms and interests” [cf. magicians and chefs]When research is itself a commercial activity, patent holders more likely to assert, and researchers more likely to abandon,

infringing activitiesLittle empirical basis for claims that restricted access to IP is impeding biomedical research, but evidence that access to

material research inputs is restricted more often, and individual research projects can suffer as a consequenceRedirection may reduce duplicative research or increase variety of projects social welfare may increaseUnclear whether patents contribute to restricted access to materials, although commercial activities seem to restrict

sharing, as does burden of producing materials and scientific competition

c. Case Study 3: “Still Believe in Love”[Judgment-writing assignment]Difficult to separate idea from expressionHow do you deal with “facts” that are not completely “factual”? How do you make inferences about them?IP law involves a great deal of ambiguity, which makes enforcement difficult

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)d. Case Study 4: Olympics

Take-home: appropriation of a symbol that has a long history, which gives it value – and should someone be able to restrict usage and access to this symbol?

o Is the Trade-mark Act enough to protect this symbol?o What is the relationship between protecting symbols and free speech?o A trademark only has value because citizens give it value

Recall Locke’s statement that effort justifies ownership But what if everyone contributed?

“Unpacking” the Olympic brand reveals many associations, most positive and some negativeMany brands associate themselves with the Olympic brandWe’ll move from a question of the Olympics generally to the Vancouver Olympics, and the ownership of Olympic brands and

associations

Bill C-47, An Act Respecting the Protection of Marks Related to the Olympic Games and the Paralympic Games and Protection Against Certain Misleading Business Associations and Making a Related Amendment to the Trade-marks Act, 1st Sess., 39th Parl., 20073(1): prohibition of adoption/use of marks likely to be mistaken for Olympic marks

o Mistaken = poor reproduction, NOT confusion: there is no need to prove confusiono Nobody from IPIC thought the Act was needed, because this does not seem to extend any additional protection

beyond the Trade-marks Act3(4): allows licensing and written consent of use of marks; fair dealing provisions3(5): clarifies that broadcasting/criticism does not abrogate TM rights

o This type of provision does not exist in the TM act; a new provision going to the nature of TMs4(1): prohibition of TMs’ use in relation to businesses4(2): combination of elements in Schedule 3 can be considered infringement (see below)4(3): placement of advertisement near Olympic logos is not in itself contrary to s. 4(1) (to protect sponsors)5(1): court has discretion to prescribe a wide range of remedies5(2): application can be made by a sponsor of the games (effectively gives licensees the right to being an infringement application)6: no irreparable harm required when asking for an injunction (an exception from the norm)8(1): right to prevent importation of goods that might infringe the TMSchedule 1: protects certain marks indefinitelySchedule 2: protects 2010-associated marks with a sunset clause

o To talk more about later: Inuit were happy that their symbol was chosen; many BC-based First Nations were unhappy that their symbols weren’t

o Questions about inclusiveness of the Olympics towards Aboriginalso Question: is protecting the inuksuk, which is part of a common cultural heritage (is it?), an overly broad

appropriation?o Inuksuit have become more popular souvenirs of the north – a potentially beneficial knock-on effect

Schedule 3: lists common terms (e.g., 2010, Vancouver) that cannot be used in certain combinations and contextso Any combination of two items from Part Io Any item from Part I and any item from Part II

Discussion o Enacted early in 2007; came into force June 2007o The Vancouver Olympic brand was already protected under Trade-marks Act s. 9(1)(n)(iii), which protects “any

badge, crest, emblem or mark … adopted and used by any public authority in Canada as an official mark for wares or services”

A previous court decision rendered Canadian Olympic Committee such a public authority Very strong protection: don’t have to show confusion; unexpungible

o But: concern over “ambush marketing,” wherein an organisation is given sponsorship rights but then another company free-rides on this paid sponsorship

o So: the Act strengthens significantly the Vancouver Olympic brand above s. 9(1)(n)(iii), but has broader applications for Olympic marks in Canada more generally

o Recall that TM law is very contextual, so issues of infringement and confusion are going to be hugely dependent on how the mark is used

o Under the Act, not just the TM holder but the sponsoring organisations can bring infringement actionso Provisions

Discussion: marketing o Stakeholders: sponsors, athletes, countries, etc.o IOC-level: the Olympic Partner (TOP) Programme, created 1985, managed by IOC, gives exclusive marketing rights

to both Winter and Summer Games Panasonic paid $200M to extend its exclusive marketing rights relative to audio & video equipment at the

Olympics and with all Committees and teams from 2007 to 2016 What if an athlete or a team is sponsored by a different company – does this mean that a photo of them on

a medal podium is “ambushing” the Games’ sponsor(s)?o Other sponsorship: e.g., Adidas pays $99.6M for a four-Olympics deal in their categoryo Local level

Tier One sponsors pay average $100M (provides marketing exclusivity in the sponsor’s category, and rights to the Olympic team as a whole – though athletes can seek individual sponsorships)

Sponsorship revenues, both int’l (via IOC) and domestic (via VANOC) account for 59% of the $1.63B operating budget for the 2010 Games

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Questions: To what extent are the Olympics national? International? Governmental? Public? To what extent should

they thus be accountable? Have we given them privileges without corresponding duties? Unclear where/how the national Committee fits into the public structure of a state Recall the decision not to send US athletes to Moscow in 1980

o What is ambush marketing? Definition (according to a supporter, Jerry Welsh): attempt to establish healthy competition in sponsorships

that were becoming extremely costly and often afforded too little benefit in return; Definition (according to IOC): attempt to mislead the public into believing that a given marketer is

supporting a sports event [though what constitutes “support”?] Sponsorship gives rights only to a particular product, but not the right to all avenues leading to the

thematic space surrounding that product (all else is up for grabs: note the contrast between the physical space and the licensed space)

IOC sees the choice as clear-cut: become an official sponsor, or stay away from the Games completely Examples

1984, LA: Fuji is Games’ sponsor; Kodak becomes sponsor of ABC’s broadcast and US track team – is this Kodak’s cleverness, Fuji’s stupid drafting of the license, etc.?

1994, Lillehammer: Visa is Games’ sponsor; AMEX ads proclaim that “you won’t need a VISA” to get there

1996, Atlanta: Reebok is Games’ sponsor; Nike plastered the city with its logo (IOC can’t control the city itself: again, contrast physical space vs. licensed space)

2002 FIFA World Cupo Budweiser is official beer; Kirin (local brand) markets self as “The Un-Official Sponsor of

the World Cup”o Dutch fans were stripped of their Bavaria Beer-labelled lederhosen, thus having to attend

the game pants-free [note the anti-authoritarian aspect here] 2002 Sydney Games: Adidas cited by consumers as the 7th most recognisable Games sponsor –

but they weren’t an official sponsor; instead, sponsored Australian swim team and their new novel body suits at a time when the team was successful (note fact vs. question)

Data High level of consumer confusion regarding marketing rights at an Olympic Games Not everybody knows that “Official Partner” is different from “Official Sponsor” Not everybody knows that brands seen on broadcasts may not be those of official sponsors

o The Olympics thus raise many of the questions we studied in relation to TMs: established brands, licenses, role of government, etc.

“Inuit Praises Logo,” www.straight.com, 27 April 2005Jose Kusugak, president of Inuit Tapiriit Kanatami : Inuit are happy with VANOC’s choice of mascot (goodwill); smiling is bizarre, but

choice of a friendly symbol is fineInuit representatives of Canada, Russia, Greenland, and US have signed Kuujjuac Declaration to protect Inuit IP internationallyPeter Irniq, former Nunavut Commissioner: Olympic inuksuk isn’t appropriate or authenticSome BC First Nations annoyed that a local symbol wasn’t chosen

Jane Armstrong, “The Friend Nobody Likes,” The Globe and Mail, 27 April 2005, A1Detractors say the 2010 Games logo (Ilanaaq) does not look like an Olympic icon: too simple, inaccurate, etc.West Coast Natives are angry that it is an Inuit symbolSome Inuit say that it is not an InuksukVANOC responds that the goal was a Canadian, not a BC, symbol – and that Inuit representatives were consulted

Committee Evidence for Bill C-47 (selections)IP Institute of Canada

o Bill gives VANOC, COC, and COC more rights than necessaryo Section 4(1)(a) (prohibiting misleading suggestions of affiliation) is valido Section 3(1) is unnecessary as Trade-marks Act already provide special protection for Olympics legislation may

prevent business supporting athletes/teams from advertising that they do so; may prevent Olympians from using that in connection with their reasonable activities

o Concerned that no requirement to show harm is too much powero Concerned over sponsors’ right to sue independentlyo Legislation should be restricted to 2010 Games and sunsetted at their termination

Jeff Bean (Olympian)o Olympic experiences impossible without sponsorshipo Bill protects Olympics investment of corporate sponsorso Has been reassured that Bill does not impede athletes’ rights; encouraged that VANOC is willing to support

amendments to this endCanadian Paralympic Committee

o Former lack of support for Paralympics was lack of corporate sponsors – but today there are manyo CPC has sponsors because it has grown the Paralympic brand, using understanding that CPC will protect this brando Successful 2010 Games will make it easier for CPC to renew sponsorships and recruit new sponsors

Own the Podium 2010o Importance of Olympic sponsors; need to ensure value (i.e., exclusivity) of these sponsorshipso Bill encourages ongoing support and new partnerships; without it, interest of corporate sponsors is reducedo Athletes must be adequately supported if 2010 Games are to succeed

AthletesCANo Need to support sponsors and licensees who have contributed – but must entrench athletes’ rights

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Athletes get sponsorship to support the costs of training, not for ambush marketing or other tacticso Need amendment to protect athletes’ right to identify themselves as Olympians/Paralympians to promote

themselvesDiscussion

o People weren’t engaging with the substantive issue of what this does to TM law – all they seemed to say was “act protects sponsors + sponsors support us act is good”

o Only stakeholders who opposed the enactment of this legislation were IPIC, which theoretically supports IP rights Concern with the integrity of TM law; how does legislating a private regime for a particular event

affect the certainty of TM law? Official marks legislation takes power out of the hands of IP lawyers and lodges it with government

bureaucrats If VANOC is likely to sue people for infringement, IPIC would likely represent those people, most of whom

are smaller, local businesses disproportionate effect This raises issues of the globalisation of corporate interests, and its interaction with IP law: often

the local businesses are those that ambush the large corporate sponsorso Athletes’ representatives raised issues of athletes’ rights

This ties to our discussion last time on First Nations’ groups – how many stakeholders see their interests infringed by this Act?

When you start talking about branding the games, you start talking about branding the individual (athlete) – what if an athlete brands herself as Nike, but the Games are branded as Adidas?

Another constituency that was affected were those who wanted to engage in protest (see below)

Sally McCausland, “Art and the Olympics” (1999) ART+LawTarget of Australian legislative measures pre-Sydney Olympics is unauthorised use of words/images falsely implying an official

connection/sponsorship with the Games – but other uses (incl. protest art) could be caught tooLegislation gives power to prohibit protest art, with no requirement that they show confusionChallenges to validity of legislation are expensive and riskyNo exception for protest art, non-profit community art or parody/satiric usesAustralia has no free speech guarantee like the USDiscussion: appropriation art

o The Canadian Act specifically accounts for criticism and reviewo The best way to raise concerns about the Olympics is to use its symbols (“appropriation art”)

San Francisco Arts & Athletics v. U.S. Olympic Committee, 483 U.S. 522 (1987)Facts: SFAA promoted Gay Olympic Games (similar structure, events, etc. to Olympics) despite warnings from USOC that it violated their special legislated right under the Amateur Sports Act [see Bill C-47 above] to exclusive use without having to show likelihood of confusion and whereby normal statutory defences are unavailableIssues: (1) Is “Olympic” a generic word that cannot gain TM protection? (2) Does the First Amendment prohibit Congress from granting exclusive use of a word absent a requirement that the authorised user prove that an unauthorised use is likely to cause confusion?Holding (Powell, 7-2): (1) No. (2) No. U.S. Olympic Committee1. Generic wordReasonable for Congress to conclude that “Olympic” was the product of USOC’s talents/energyHistory/origins of “Olympic” demonstrate that it’s not a generic random word; has a secondary meaning distinctive of USOC’s goods

in commerce2. Likely confusiona. First AmendmentSFAA claims that use of “Olympic” is meant to convey a political statement about status of homosexuals – but neither Congress nor

USOC has prohibited this message, and purely expressive uses of “Olympic” are permittedRestrictions are incidental to primary congressional purpose of encouraging/rewarding USOC’s activitiesCongress seeks to ensure that USOC receives benefit of own efforts; considers broader pubic interest restrictions not broader than

Congress could reasonably have determined to be necessary to further these interestsReasonable to conclude that most commercial uses of Olympic words/symbols are likely confusionsSFAA sought to exploit commercial magnetism of Olympics (image sought to be promoted was exactly that cultivated by USCO)

can undercut USOC’s effortsb. Fifth AmendmentSFAA claims that enforcement of the right is discriminatory question is whether USOC is a government actorFact that Congress granted USOC a charter, that it granted exclusive use of “Olympic,” that it subsidised USOC, are not dispositiveNeither conduct nor coordination of amateur sports is a traditional government functionGovernment is responsible for a private decision only where it has exercised coercive power or has provided significant

encouragement – not hereUSOC is not a government actor, and acted in conformity with its charter no discriminationRatioHistory/origins of “Olympic” demonstrate that it’s not a generic random word; has a secondary meaning distinctive of

USOC’s goods in commerceRestrictions are incidental to primary congressional purpose of encouraging/rewarding USOC’s activitiesUSOC is not a government actorNotesShould distinguish between words that are associated with a product because they originated with that product and then acquire a

generic meaning (e.g., Kleenex, Xerox), and those that begin as generic and acquire a secondary meaning (e.g., Olympics)Does the Court conflate “generic” with “random”?The Court seems to meld a variety of rationales and reasons for why USOC should get a monopoly: secondary meaning,

free-riding, etc.The discrimination claim ties in nicely with the Canadian discussion of the COC’s public authority status (see Strawczynski below)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)They don’t address the discrimination claim because the government-actor threshold is not met; the USOC’s 1980 decision not to

send athletes to Moscow was not a government decision – but there was government pressure, and the general purpose of the Olympics is (or at least was initially) to promote international understanding and peace between nations

USOC would say that they are not pursuing SFAA because their event is gay, but because it’s an Olympics, but the SFAA would argue that the Olympics don’t make a space for gay athletes, so this is their only option, and it’s isn’t free-riding but rather a compensatory space – OR is the discrimination claim based in the fact that USOC wasn’t licensing to SFAA because they’re a gay organisation (i.e., association with Gay Olympics would dilute the Olympic brand why were the Paralympics brought under the aegis of the Olympics, but the Gay Olympics are not welcomed?) the nature of the discrimination claim is unclear

Juda Strawczynski, “Is Canada Ready for the Vancouver Winter Games?: An Examination of Canada’s Olympic Intellectual Property Protection” (2004) 62 U.T. Fac. L. Rev. 213Introduction

o Concern that Canada will be unable to offer sufficient protection for Olympic IPo Misener recommends that Canada enact legislation to increase protectiono Thesis: questions need to create additional protection; if additional protection, consider it carefullyo Adequate protection of Olympic IP is essential to successful VANOC financing; IOC increasingly concerned by

ambush marketingo Traditionally, “prohibited marks” section of Trade-marks Act has provided strong protection for Olympic markso Concern that changes in Act have weakened available protection

Overview of “Prohibited Marks” section of the Acto Definition of “public authority” under s. 9(1)(n)(iii) not defined in Act; left to discretion of Registrar of TMso Registrar of Trade Marks v. Canadian Olympic Assn. (FCA, 1983): COC is a public authority adoption of official

marks makes these marks prohibited marks has used this status to protect Olympic IPChallenge to COC’s “public authority” status

o Court in 1983 employed a relaxed version of public authority test; recent decisions have made this test more difficult to pass

o Ontario Assn. of Architects v. Assn. of Architectural Technologists of Ontario (FCA, 2002): two-part test of government control (stringent test) and public benefit; this test now the standard for determining if an organisation of a public authority and is followed by CIPO

o Misener claims that COC can no longer be characterised as a public authority Fact that it is non-profit is no longer sufficient Financial independence shows decreased government control Now a partner of the general government, not a dependent

Countering the challenge to “public authority” statuso May be premature to rule out public authority statuso Rationale for narrowing the test: concern that official mark status Is overused, and that some official mark owners

can get sufficient protection by other means (incl. regular TM registration)o Non-profit status is only one of five factors used to investigate government control in 1983 COC can still rely on

other factorso COC is a non-profit but is seen as benefitting all Canadianso COC protects IOC IP, as well as COC IPo Power of COC is not granted by statute; an independent organisation accountable to IOC need other assessment

factors than those in Architectso Level of government control is conditioned by COC’s autonomous nature – but government still has ongoing

influence (esp. in planning)o Misener wrote before Vancouver won its bid; federal involvement has increased since then shows government’s

willingness to get involved when need arises; context shows that COC is now a public authorityo Canada willingly submits to Olympic Charter government defers to requirements of IOC, ceding power of

governance with respect to COC – but this is an exercise of a sovereign right to show deference, and efforts to include government participation point towards control

Future directionso Legislative protection

COC should be able to continue to adopt official marks no real need for legislative change If legislative change needed, COC could try to lobby government to include it in s. 9 of Trade-marks Act

(like Red Cross and UN) If this amendment impossible, limited legislative change may be in order Federal Competition Act and Trade-marks Act already make ambush marketing difficult; unclear that

additional legislation would help Unclear that legislature should prohibit all forms of ambush marketing

o Non-legal tactics Canadian government can pursue a non-legal approach to hamper ambush marketing; can provide some

of the strongest forms of protection Non-legal tactics applied successfully in past Olympics Canadians should deliberate whether additional legislation is required, or whether some

ambush marketing is acceptable as commercial expressionDiscussion

o The more the COC gets corporate support, the less it looks like a government entity and the more it may need specialised legislation – and vice versa

o The Act was indeed passed – so this article is interesting in that lighto Compare IP space with other property spaces: if a corporate-owned town cannot discriminate in public spaces

because it acts like a government, can the COC/USOC similarly be seen as a government entity?

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Charles Hotel (Counsel to VANOC), “Ambush Marketing and the 2010 Winter Games”Ambush marketing can undermine revenue base of sportVANOC seeks to build a commercial model that rewards sponsors/partners, allows for community engagement, and builds

sustainable legacyProtecting against confusion, protecting goodwill and associationAlready many incidents of unauthorized associationPrivate funding makes up 74% of the budget2-step analysis

o 6 considerations for acceptable use (much overlap) Factually accurate: no distortion Relevant: must be part of a larger story; cannot just be free-riding Commercially neutral: no use in conjunction with logos of 3rd parties that have not paid for sponsorship Undue prominence: contextual assessment within overall initiative/storyline/etc. Use of Olympic or Paralympic visuals: use of marks is exclusive right of Olympic rights holders; refers

to “visuals” and not just to “marks” Unauthorized association: forbidden between Olympic brand and third parties

o Assessment of appropriate action: (assessment matrix for these considerations)o Discussion

Overlap between categories will lead to double-scoring, which is weighted towards certain uses Note that the scale starts at 6, assuming that every category will score at least 1 (i.e., that every use is at

least mildly infringing) How will this table of discretion (other than demonstrating “non-bias” to the public) affect any lawsuits or

injunctions sought under the new Act, particularly given that it doesn’t look anything like TM law Does assessing “use,” before “use” is even established, presume the conclusion? Many people argue that Olympic branding has nothing to do with TM, given that TMs are designed to

protect efforts to create a brand-name and loyalty, whereas here companies get access to the brand simply by paying a great deal

VANOC seems to start from a premise that is explicitly considered irrelevant by the courts in other TM cases, whereby it’s free-riding rather than confusion that is important (inversion of traditional TM law)

This matrix may limit the potential of the community to involve itself with the Olympics (problematic given the promised knock-on effects of hosting?), to congratulate the athletes, to be known as philanthropists, etc.

VANOC’s exampleso Example 1: retailer places an ad in close proximity to a news editorial containing the 2010 Emblem

This appertains to s. 4(3) of the Act: proximity doesn’t necessarily indicate infringement Does asserting infringement here unduly expand the Olympics’ rights (to other pages of magazines, etc.)? VANOC agrees that this does not infringe

o Example 2: during Games, business places ad in local newspaper depicting model skier traversing the slope with tagline “Let the Games Begin in Vancouver”

Infringes s. 4(2) by using Schedule 3 words in combination No problem with accuracy, but relevance is at issue (no storyline), commercially non-neutral (company

logo used with the phrase and next to the Olympics logo), undue prominence (tagline), no problem with visuals (Olympics doesn’t own skiing), unauthorised association (flows automatically)

VANOC rates this at the high end of the moderately worrisome zoneo Example 3: a full-page ad saying “Celebrating Canada’s Olympic Performance” with a picture and the name of a

skier and the company logo Uses Schedule 3 words, a visual, etc. VANOC rates this high in the “likely to infringe” range

o Example 4: similar to above, but with Olympic achievement placed alongside others of the athletes’ achievements Does the same as above, but “appears” more generally to congratulate the athletes rather than using

congratulation as an excuse to sell their product VANOC rates this very low in its potential infringement continuum

o The “distinction” between examples 3 and 4 reflects the concern that many people have with the perceived overbreadth of the Act

e. Case Study 5: “Power Tools” – IP and DevelopmentTake-home: how do countries’ interests align with IP?

o How did it come to be that of all the private rights, only IP has come to be enshrined in a trade agreement?o How did the players use the different institutional structure?o Ambiguity about what is “right” for a country, and what is in a country’s “best interest”

Termso Compulsory licences (can’t sue a generic for its use of a patent) are used when:

Someone has a patent for a product and doesn’t market it Government wants to fight anti-competitive behaviour Government wants to lower prices

o Licensing Non-exclusive license: I won’t sue you for using it Sole license: only you can use it Exclusive license: I won’t use it myself

Some developing countries have health issues without the capacity to manufacture drugs to deal with them (e.g., RSA, Zambia); others have the sophistication to manufacture the drugs (e.g., Brazil, India, China).

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TRIPS Agreement: http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htmPREAMBLE to the Agreement on Trade-Related Aspects of Intellectual Property RightsPART I: General Provisions and Basic Principles PART II: Standards Concerning the Availability, Scope and Use of Intellectual Property Rights

o 1. Copyright and Related Rights o 2. Trademarks o 3. Geographical Indications o 4. Industrial Designs o 5. Patents o 6. Layout-Designs (Topographies) of Integrated Circuits o 7. Protection of Undisclosed Information o 8. Control of Anti-Competitive Practices in Contractual Licences

PART III: Enforcement of Intellectual Property Rightso 1. General Obligations o 2. Civil and Administrative Procedures and Remedies o 3. Provisional Measures o 4. Special Requirements Related to Border Measures o 5. Criminal Procedures

PART IV: Acquisition and Maintenance of Intellectual Property Rights and Related Inter-Partes ProceduresPART V: Dispute Prevention and Settlement PART VI: Transitional Arrangements PART VII: Institutional Arrangements; Final ProvisionsDiscussion

o All the previous conventions we’ve looked at (Paris Convention, PCT, etc.) proposed fairly low levels of harmonisation and were practically unenforceable (compliance was voluntary)

o Came into force 1995; fairly controversial – changed the landscape because it was enforceable through the WTO’s mechanisms

o WIPO used to be a club for developed countries to push through pro-IP enactments, but membership expanded to developing countries developed countries sought protection from WTO instead

o Developed countries (esp. US and EU) put IP on the agenda and imposed it on everybody elseo TRIPS covers patents (20 years), copyrights (50 years), and trademarks with higher standards than other treatieso FTAs pushed Canada away from a compulsory licensing regime to a more difficult standard under NAFTA, and TRIPS

was even highero Developed countries had to meet TRIPS standards immediately; 5-year delay for developing countries; 10 for LDCs;

extra 5 years for pharmaceuticalso AIDS crisis woke NGOs up to the problem with more patents (hard to get drugs to developing countries) Doha

Declaration (below) solutions implemented by developing countries nothing happenedo TRIPS art. 27.1 requires patentability for everything that meets criteria: (1) new; (2) inventive step; (3) capable of

industrial application; art. 27.2 provides exceptions for morality and public ordero Under TRIPS, can issue compulsory licence for any reason, as long as you try to negotiate with the patent holder

first on reasonable termso Compulsory licenses allowed only for domestic consumption

If no patent in India and none in Mali, Indian companies can sell in Mali with no problems But all manufacturing countries were complying by 2005 and had patented the relevant drugs – so

compulsory licenses were predominantly for domestic useo Needed members’ approval to join WTO, so members (esp. US and EU) imposed more restrictions TRIPS

Doha Declaration on TRIPS and Public Health: http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm1. Gravity of health problems, especially epidemics 2. Need for TRIPS to be part of wider national/international action3. IP is important for development of new medicines; concern about effect on prices4. TRIPS should not prevent measures to protect public health; should be interpreted supportively of Member’s rights to public health

and access to medicines; full use of TRIPS flexibilities5. Flexibilities include:

o a. Read each provision in light of the object/purpose of whole agreement (see above) o b. Right to establish regime for and grant compulsory licenses o c. Right to determine what constitutes a national health emergency o d. Each Member free to determine what counts as exhaustion of IP

6. Those with little/no manufacturing capacity require an expeditious solution before end of 20027. Developed countries to provide incentives for technology transfer; transition period for LDCs to last until 2016

Cancun Agreement on Amending the TRIPS Agreement: http://www.wto.org/english/tratop_e/trips_e/wtl641_e.htmArticle 31bis

o 1. Existing obligations don’t apply to grant of compulsory licenseo 2. Compulsory license not to be granted without adequate remunerationo 3. LDCs in regional trade agreements are also eligibleo 4. No GATT-based challenges to these licenseso 5. No prejudice to other obligations

Annexo 1. Definitions

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http://www.wto.org/english/tratop_e/trips_e/t_agm1_e.htm

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o 2. Compulsory license application (a) to include names, quantities, confirmation of no local capacity; (b) to be

limited to amount required, packaged distinctively; (c) to be notified to WTOo 3. Reasonable measures to prevent re-exportationo 4. Reasonable measures to prevent parallel importationo 5. Regional patents to be promotedo 6. Desirability of technology transfero 7. Annual review

Discussion: Doha Declaration and Cancun Agreements say that TRIPS art. 3f can be suspended

Canada’s Access to Medicines Regime (Patent Act, ss. 21.01-21.2)21.01. Purpose21.02. Definitions21.03. Procedure for amending Schedules21.04. (1) Grant of compulsory licenses; (2) requirements of application; (3) requirements of notification, Ministry of Health-approved

equivalency, and prior negotiation with patent holder, and Schedule-specific requirements21.05. Application to indicate quantity21.06. Requirement to establish and maintain a website detailing status of manufacture/export21.07. Notice requirements to patentees, importer, etc.21.08. Royalty requirements and formula21.09. Two-year duration21.10. Non-exclusive use21.11. Non-transferability of authorisation21.12. One-time renewal21.13. Automatic termination on failure of conditions or expiry of term21.14. Termination on patentee’s allegation of failure of conditions21.15. Notice to patentee of any authorisations21.16. Licensee to provide a copy of agreement21.17. Formula for determining when application is commercial in nature; application rejected/terminated if that is the case21.18. Minister to set up advisory committee; Parliamentary review21.19. Canada to maintain a website about its process21.20. Minister must complete review and table report within 2 yearsDiscussion

o Huge bureaucratic steps – but little actiono One compulsory licensed issued (to Apotex, for triple dose combination to Rwanda), but none has been

manufactured and none will likely ever beo Questions: What should Canada’s IP rules look like? Is it in our interests to increase or decrease our IP rights? What

can we get away with politically, given our neighbours? Don’t we look like some developing countries, when viewed in this manner?

Idris, Intellectual Property: A Power Tool for Economic Growth, c. 2Generally agreed that tech and knowledge have had important role in recent economic growthClassical theories

o Smith/Ricardo/Marx: capital important in theories of growth, until diminishing returns reached (decreasing output per unit input)

o Eventual prediction that growth would diminish at some point pessimismTwo schools of thought

o Both agree that technology is the engine of growth, but differ in how to treat technological progress as a factoro Endogenous growth theory

Technological change included in new capital stock; induced by previous economic conditions Focuses on education, on-the-job training, development of new technologies Schumpeter: initially

Growth theory centred on innovation and entrepreneurship Dynamic economy constantly disrupted by technological innovation Entrepreneurs motivated by profit: driving force of most innovation Some monopoly power as necessary to enable entrepreneurs to keep innovating

Schumpeter: eventually Demise of entrepreneurs; emergence of new mode of economic organisation where innovation

and R&D conducted by large firms Other economists followed; IP as an important factor influencing entrepreneur’s behaviour

o Exogenous growth theory (1950s: neoclassical economists and Solow) Technological change contributes to increased output without any change to inputs of labour and capital Technological progress as important variable in economic growth Capital stock growth explained some economic growth; the rest (Solow residual) explicable through

technological progress (an exogenous variable) Solow model: capital, labour, and knowledge combine to produce output, the level of which can determine

the growth of an economy over a period of time Economy will grow if large share of total output is devoted to investment, or if a rapid growth in technology Countries with higher rates of technological growth ( productivity growth) higher standard of living Assumption of technology growth as exogenously determined and thus increasing productivity of (effective

= biological + technological growth) labouro Endogenous growth redux (1980s: Romer)

Technological progress as endogenous variable, influenced by government policy Accumulation of knowledge as driving force behind economic growth

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) R&D + accumulation of human capital (education and training) long-term growth Technological progress requires concerned, profit-oriented activity: patentable (exclusive) features; and

knowledge that these features are for public goods Excludability through patents or through secrecy Government economic policies should encourage investment in new research and subsidise accumulation

of human capitalGlobal awakening to the roles of IP in the 1990s

o New pattern of global trade; connection between trade and IP policies; TRIPS (global standards)o General adaptation to (and criticism of) prevailing IP regimeso IP integrated into knowledge economy; statistics suggest relationship between economic growth,

R&D, and IP Argued that IP influences appreciation in value and accumulation in quantity of human capital, and rate of

accumulation of technological change IP system as important element of institutional infrastructure of encouraging private

investment in R&D Increasing contribution of knowledge-intensive industries to GNP Firms more likely to protect their inventions Current data on IP’s importance in economic development are still limited, because factors are so

complex Patent systems established to promote creativity/inventiveness, promote investment, diffuse knowledge –

but these reasons are more applicable to developed than developing countries In developing countries, most patent applications are filed by foreigners Critics of patent system: economic rewards for innovation will flow from developing to developed countries But: patent system offers advantages to developing countries: technology transfer; practical guide

to investment decision-making; indicator of level of protection; indicator of risko IP and investment

Research shows direct link between enhanced IP protection and increased inward FDI Arguable that IP protection is catalyst in stimulating R&D; increased foreign trade and investment

increased growth IP other than patents also shows positive aspects A positive, two-way, and mutually reinforcing relationship exists between IP and international

trade Shirt-term gains and losses should be considered IP now a common feature in business regulation Access to IP now a strong feature in business decisions (esp. M&As)

o IP protection as growth policy Wide-ranging ramifications on the economy: can make current information available to innovators Positive effects can be tempered by perceived availability and strength of IP protection IP activity must be relevant to economic priorities of the country IP regime can bring out potential for innovation/creativity/growth – but isn’t a cure-all: also need legal

infrastructure, progressive IP policies, public conviction/awareness

Idris & Arai, The Intellectual Property-Conscious Nation: Mapping the Path from Developing to Developed, c. 1Not all countries have benefitted equally from dynamic expansion of R&D related RDI and R&D incentives“Innovation culture”: innovation/creativity are valued/appreciated, adequately funded, and channelled to specific

needs – a key factor in enhancing well-being and creating wealthAppropriate institutional support of R&D required; IP as a mechanism for stimulating a climate of growth and innovationInternational community needs to give central role to innovation – not just science and tech, but innovation culture, enhanced

R&D, pro-active initiatives, social networks, leveraging resourcesIndia/China/Malaysia have seized this pointLevel/depth of innovation culture measurable by economic, social, health, educational criteriaOne of the most reliable indicators of innovation is patenting activity; Patent Cooperation Treaty as the cornerstone

o Many developing countries have many patents; others have few, and small foreigner-local patent ratioo Trademarks also: some developing countries have many (innovative); others have weak activity (not innovative)o High ratio of resident to non-resident activity may imply strong local technological capacity, as well as openness

and attractiveness; low ratio can demonstrate need for government policies supporting innovation, IP, and businessIP system converts innovation into growth

o Domestic knowledge/innovation/ideas don’t automatically generate growth – must be part of a process supported by IP system allowing conversion of economic assets into goods/services/information

o Past failure of many countries to realise knowledge potential explicable by absence of free market and institutionalised property rights (now, IP rights)

o Health/privacy/security/science/tech – must all integrate IP concerns, whereby IP can contribute to economic healtho National development strategy must strategically integrate IP issues; provides capital/incentives, but also facilitates

entry into global marketplace and funds for further investmento Underlying concept of innovation culture: use/inclusion/integration of IP system into every

government policy

Musungu & Oh, “The Use of Flexibilities in TRIPS by Developing Countries: Can They Promote Access to Medicines?”Summary

o Use of TRIPS flexibilities can promote access to medicines in developing countries – but gaps remain in incorporation and usage of flexibilities

o Stated trade policies of US and EU don’t account for public health priorities of developing country trading partners

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o FTAs risk undermining developing countries’ effective use of TRIPS flexibilitieso Public health perspective: developing countries have not only possibility but obligation to use TRIPS flexibilities for

public health purposeso Policymakers in all countries need to base implementation of IP rules on pro-health and pro-access

principleso Must ensure:

Rapid/effective response to public health needs Sustainable supply of affordable medicines/products Competition from developed and developing countries Provision of wide range of pharmaceuticals and opportunities

Implementation of TRIPS flexibilities for public health purposes in developing countrieso More and more developing countries use the flexibilitieso Flexibilities do not automatically translate – must be incorporated into national lawso Transition periods

TRIPS’ first two periods (for developed and developing countries) have passed implications for supply and availability of generic products

Third period (for LDCs) in force until at least 2016 – and it recognises implications of patent protection on public health; absence of patents may (not) stimulate growth of local pharmaceutical industry; its absence ensures that patents will not be an obstacle to generic medicine supplies

o Compulsory licensing Critical importance for public health – but the grounds for use vary considerably Developing countries should incorporate compulsory licensing provisions and specify as many

grounds as possible Need simple, straightforward procedures, and a guarantee of adequate, predictable

remuneration for patent holderso Public, non-commercial use of patents (government use)

Right of the state to use a patent without holder’s consent Developing countries should incorporate non-commercial use provisions, waiver of prior

negotiations in cases of government use, and simply interagency decision-making processo Parallel importation

Important tool where there are price differences between products in different markets Developing countries should provide themselves the widest possible scope for parallel

importationo Exceptions to patent rights

TRIPS doesn’t define scope/nature of permissible exceptions countries have much freedom Should incorporate early working exception, enabling generic products to gain regulatory

approval and enter the market soon after expiry of the patento Exemptions from patentability

TRIPS doesn’t require patenting for new uses of known products Developing countries should exclude new uses of known products of process from

patentabilityo Limits on data protection

In some jurisdictions, time-limited exclusivity to originator company: regulatory authorities cannot rely on test data to register generic substitutes

Developing countries should allow drug regulatory authorities to approve equivalent generic substitutes on the basis of reliance on the originator data from the time of its submission

o Implementation of Doha Declaration Paragraph 6 (30 August) Decision Paragraph 6 allows developed countries to issue compulsory licences for export to developing countries to

address public-health crises Should provide for a broad range of grounds for compulsory licence issuing; time limitation on

negotiations; no restriction on eligible products; remuneration to be waived in importing country; no delay pending litigation or appeal

Should use less cumbersome means than Paragraph 6 wherever possibleIP-related trade policies of major developed countries and public health in developing countries

o US and EU policies vis-à-vis developing countries with respect to IP and access to medicines are critical factor determining how developing countries address IP, innovation, and public health

o USA Trade policy is framed as a foreign trade and security instrument unlikely to consider developing

countries’ health priorities Exclusive focus on interest of export industries restrictive interpretation of flexibilities Stated objective of bi- and multilateral agreements reflecting comparable standard of protection to US

runs counter to accepted principle that IP regimes should be tailored to each country So: review and revise, allow for better balance between exports and access to medicine, allow

for flexibility in bi- and multilateral agreements, implement 30 Augusto EU

A little more favourable than USA Policy of ensuring adequate and effective protection in line with international standards concerns Predomination of market access concerns devaluing availability and access So: ensure that conditions on exports do not lead to disincentives, clarify level of protection

demanded, review implementation of 30 August Declarationo Japan, Canada, and Switzerland should clearly state policies with regard to IP protection and access to

medicineso Japan and Switzerland should implement 30 August Declarationo Canada should ensure that its 30 August legislation doesn’t create barriers to exportation

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Bilateral and regional FTAs: Practical implications for access to medicines in developing countries

o Recent FTAs (esp. with USA) have potential to undermine TRIPS flexibilitieso Partner countries accept that they are losing TRIPS flexibilities, but expect that net gains will allow more purchase

of more expensive medicines – but this is difficult to rationalise and doesn’t work (not all citizens benefit)o Object and purpose of IP protection and general approach to exceptions

Should clearly spell out objet/purpose of IP to preserve flexibility and encourage sensitivity to public health

Ensure that application of non-violation and situation complaints to IP matters under FTAs doesn’t undermine implementation of flexibilities

Ensure that restrictive rules don’t undermine 30 Augusto Protection of test data and patent term extensions

Current trend: application of mandatory exclusivity model negative consequences for public health Clarify/amend FTA provisions that restrict use of test data by public health authorities

o Compulsory licences including licenses under 30 August Declaration and government use – maintain flexibilityo Early working exception

Most FTAs have constrained this flexibility; generic companies cannot test in each country where they seek registration

Remove requirement that export is only permissible for registration; allow export for marketing approval

o Exemptions from patentability: ensure that there are no long-term negative consequences from permissive patentability criteria

o Parallel importation: adopt an international exhaustion regime [?]

Gerhardsen, “US Seeks Review of WHO Publication Policy After Report on US Trade Deals” (28 September 2006)Steiger (Special Assistant to the Secretary for International Affairs at the US Department of Health and Human Services) wrote to

Nordström (Acting Director General of the WHO), demanding withdrawal of the Musungu & Oh Report (above)Steiger asserts that the Report “spuriously characterizes the trade policy of the United States as a threat to public health”Steiger expressed “serious concerns” about WHO’s decision to publish the report, citing “lack of competence in this area and …

failure to consult with other relevant international organizations” needs a “full review” of WHO’s publication policyCritic: study commissioned by WHO in Oct 2004 as part of a consultation round to the WHO report by the Commission on Intellectual

Property Rights, Innovation and Public Health; draft version presented May 2005 for all interested parties; Commission report published April 2006

Musungu: WHO asked authors to analyse the use of TRIPS flexibilities by developing countries

Letter from William Steiger to WHO, 18 Aug 2006[As above]

UNCTAD, The Least Developed Countries Report 2007, c. 3Trends in IP protection

o IP protection and the governance of knowledge IP rights “refers to those legal rules, norms and regulations that prevent the unauthorized use

of intellectual products” Boundary between patents and copyrights has been eroding Trends: growing economic importance of IP; qualitative changes in IP rights; tightening rules governing

access to knowledge; reduced patentability thresholds; increased use of “defensive patents”; more restrictions on “fair use”; increased control over knowledge by a small number of corporations; IP protection moving from defensive to offensive strategy

Developing countries have been encouraged to broaden the scope of IP protection, regardless of own needs/conditions – channelled through bi- and multilateral agreements/obligations

IP has been labelled a “power tool for economic development and wealth creation” (Idris, above), but there are critics

o Trends in IP protection, worldwide and in LDCs Patent filings worldwide have grown – but mainly concentrated in a small number of (mostly

developed) countries LDCs’ share of global patents is insignificant In LDCs, patent applications by non-residents exceed those by residents Trademarks and industrial designs play a greater role than patents for LDC residents Low level of patenting activity by LDC residents mirrors low R&D expenditure Per capita licensing in LDCs has not increased since TRIPS

o LDCs in the TRIPS-based policy regime IP entered multilateral trade negotiations in Uruguay Round because of US/EU/Japanese pressure from

pharmaceutical and entertainment companies LDCs obligated to apply same “minimum” IP standards as other countries, post-(10-year-)transition period TRIPS-plus regulations can impose on LDCs even higher obligations than on other WTO members Post-TRIPS, IP protection extended to include previously unprotected goods in developing countries TRIPS provides many flexibilities – but they must be incorporated specifically into national laws and might

be limited by bi- or multilateral obligations as well as regional IP systems TRIPS-plus regulations limiting flexibilities adversely impact access to global knowledge pool

constrain national policy, limit prospects for effective industrial policy Even with flexibilities, TRIPS is problematic: high transaction costs, procedural requirements,

lack of expertise in LDCs to implement, low technological capacityo Calls for reform

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) After 2 decades of increasing IP protection, growing concerns about how far the process has

gone Developing countries increasingly concerned that development dimension insufficiently integrated into

global IP policymaking 2004: WIPO launches Development Agenda, calling for reform of IP regime, adaptation to needs to

developing counties, and balancing public and private interests Almost all developing countries are net importers of technology and depend on externally

generated knowledge IP regime can hinder/prevent catch-up strategies IP can’t be seen as an end in itself, but as a means for development/growth/poverty reduction Three options: work within current agreements, roll back, or new IP modalities

The “knowledge trade-off” underlying the rationale for IP rights, and its applicability to LDCso IP rights and the knowledge trade-off

Access to knowledge possessed by developed countries is generally seen as key to strong capital formation and technological progress in developing countries

Conventional economics has struggled to integrate innovation into its models; leaving the market to disseminate innovation may not lead to optimal distribution outcomes

Innovation tends to be a high-fixed-cost activity vulnerable to copying – but unlike public goods, creators can exclude others (through IP rights) regardless of social welfare

Assumption that knowledge “spills over” underestimates knowledge’s properties as an economic good (with tacit and local nature), which makes innovation a more complex press

Strengthening innovation incentive depends on a broad range of economic/social/political factors: property rights; rule of law; political stability; leadership; health/safety standards; life expectancy; government policies; banking/financial system; etc.

So: inducing innovation depends on the “knowledge ecology”: institutional framework devised to encourage innovation – not only R&D; level of technological absorptive capacity; firm’s ability to value, assimilate, and apply new information

Unlike conventional economics, innovation institutions are constantly evolving disruption Innovation as a coordinated process between government, firms, and consumers

o IP rights, learning, and imitation Catch-up growth partly determined by size of technology gap between developing and

developed economies, and partly by developing countries’ capacity to discover and absorb new technologies

Learning as a central factor – but has to be calibrated to development levels LDCs: learning will involve absorbing and adapting existing techniques to local conditions

(mainly through imitation) Strong IP protection will hinder rather than facilitate technology transfer and indigenous

learning activities in the early stages of industrialisation Learning efficiency of firms depends on country-specific elements that predetermine capabilities,

efficiencies, and mobility (including knowledge ecology) IP rights can stimulate R&D investments only where absorptive capabilities already exist – if compliance

costs don’t exceed benefits In countries without absorptive capabilities, innovation is like to remain underdeveloped in the face of

grater protection Possible for patents to block technology transfer: anti-competitive and strategic deployment Claims about unequivocal impact of IP ion innovation is difficult: knowledge generation, accumulation and

diffusion varies by sector and technology Recent attention on strengthening property rights as a means of establishing an innovation climate will

damage LDCs where the focus is on imitation chokes off reverse engineering options that enabled the previous generation of developing countries (esp. East Asia) to succeed widening knowledge gap

No evidence that increased IP in developing countries will create more opportunities to access latest technologies or increase innovation

Policymakers should consider differentiating IP in line with countries’ economic and technological development

o Patent excess in the knowledge economy Traditional consensus on benefits of stronger IP rights is breaking down Many industries/fields now characterised by “patent thickets” growing hostility towards IP systems Growing recognition that patents may not be necessary, since other mechanisms may more

effectively stimulate innovation (esp. in “initiation phase” of technological learning) Copyright’s capacity to limit knowledge access will adversely impact LDCs that need access to contribute

to and benefit from global research/information system Overprotection distorts efficient market operation poorest countries are biggest losers

Chen & Puttitanun, “Intellectual Property Rights and Innovation in Developing Countries”Introduction

o Predominant view: southern countries lose from protecting IP – and they don’t do it without northern pressureo Critique: without southern IP protection, northern countries would not develop technologies needed in the South;

northern firms may react to lack of southern IP protection by making technologies more difficult to imitate; IP could still increase world welfare

o Thesis: even if strategic northern behaviour is not a concern, southern countries may still want to protect IP for domestic economic considerations; domestic innovative activities may rise with stronger IP need to find the optimal level

o There are substantial innovative activities in developing countries [how many of these are registered by non-residents, though?]

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Collectively, southern IP can affect northern innovation – but country-by-country, the South doesn’t have much

effect northern innovation can be considered exogenouso Model: small developing country with an import sector and a local sector

Import sector: more IP rights less imitation lower product quality of domestic firms less competition and higher price for foreign firm reduced consumer and social surplus

Local sector: more IP rights less imitation more incentive to innovate more efficient investment and higher consumer and social surplus

Optimal IP protection must balance this trade-off Developing country’s preferred IP rights levels can exhibit a U-shaped curve with respect to levels of

economic developmento Most existing studies take IP rights as exogenous – but rational developing countries will choose optimal IP levels

IP rights as endogenousConclusion

o Lower IP rights facilitate imitations of foreign countries; higher IP rights encourage domestic innovationo Possible for optimal IP rights level to depend on level of development in a non-monotonic (i.e., U-shaped) wayo So: positive impact of IP rights on innovations in developing countrieso Conventional IP wisdom has been that developing countries lose from increasing IP rights, and only do so under

northern pressure (i.e., trade off between access and innovation) – but the real trade-off is facilitating imitation and providing incentives for domestic innovation

o Benefits from IP rights to a developing country are more than encouraging domestic innovation in the narrow sense – part of a broader effects on entrepreneurial activities

o Common North/South interests in promoting IP rights in the South: North’s interests best served by promoting southern innovation

Discussion: if you think of a spectrum of no-IP-rights to maximal-IP-rights, where should Canada be?Technically, we must comply with TRIPS, which is largely the same as NAFTA (which killed our compulsory licensing mechanism)

o Though much of our trade is with the US, that trade is regulated by NAFTA and US can’t really change it (in theory)o Gold: the US used Canada as a way to get to TRIPS, and is now using other countries to get beyond TRIPSo Because we got into trade agreements early, before US started ratcheting things up, we actually have much

flexibility relative to other countries (e.g., Australia, in its FTA with the US)We have no other bilateral agreements that go beyond these provisionsWhy did Canada, 18 mo. ago, pass a new data protection law for pharma?

o To sell a drug on the Canadian market, must provide dossiers on manufacture, clinical trials, etc. to Health Canadao When HC approves your dossier, you can sell your producto Generics could say (as they used to) that they are producing the same thing, so need only show identical

composition rather than new approval (after patents have expired)o If pharma can get generics to have to go through the cost of clinical trials, it will keep generics off the marketo 18 mo. ago, new legislation was passed such that generics can’t look at this material for 8 years during the patent

term – but if the generic comes along later in the patent term, there will effectively be an extended patento US terms are 5, Europe is 10, so it looks like Canada just averaged rather than thinking it through

Gold: people and companies don’t make rational, long term-based decisionso Canadian companies are in the business of being competitive in a different manner from their US counterpartso If IP didn’t exist, companies would still find ways to make money off their IP knowledgeo Why do universities transfer technology thinking that they’ll make money, when they consistently lose money?

Gold: the US has a much more balanced IP regime: broader fair dealings provisions, decision in Merck giving broad research exceptions – balance is achieved over time when very different industries approach the same issues with different agendas, and when cost and benefits are both internalised

So: is it in our national interest to harmonise with the US, or to remain different (and in what way)?Copyright

o Canada’s music artists are the most subsidised in the world; more reliance on public funding – which we do because we think that culture is distinct from entertainment and deserves support

o Would more support of the IT sector enable us to develop this industry?o Given the tiny size of the Canadian market, would quadrupling the copyright protection actually help

established/celebrity artists?o Artists who are just getting started could arguably need copyright – but then again we’ve talked about whether IP

rights actually breed/promote innovationo Who would benefit from stronger Canadian copyright, and do we want them to benefit relative to others?o Since the courts don’t get to decide about int’l treaties, Parliament could take the view that Canada already

complies with int’l obligations no need to legislate when new treaties are signed E.g., US has decided that it complies with the Berne Convention, based on the Gilliam case – though if you

read the case you realise that they haven’t Only when you look at TRIPS, which is enforceable through trade standards, do you see a situation where

the government can’t just declare complianceo But now the US wants us to have stricter copyright laws according to the WIPO Copyright Treaty (prevention of

digital circumvention devices under art. 11, etc.) how should Canada implement that? Gold: to be fair, we did sign the Treaty It may be better to comply with the minimum requirements (those that surpass our trade obligations) in

order to appease the US, but implement them to the smallest possible degreeo However, we have many industries that rely on copyright, and maybe these industries need Canadian copyright

protection (e.g., do QC film and music industries need Canadian copyright because copyright elsewhere doesn’t help them – or do/should we just drive this whole industry with public funding?)

o Gold: we know that what the music and film industries in the US are doing is following a model that isn’t working – and will eventually fall apart

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) So do we just hold out and wait for it? Is it worth trying to comply now? Are the transaction costs too high?

o Are the enforcement costs higher than the benefits, given that we need leakiness in the system in order to sustain innovation? Does cost leak away from producers actually diminish their ability to operate in a given field?

Patentso Difficult to say in many cases that Canadian patents drive much of anything

We focus mostly on primary resources, so we have fewer industries that are patent-dependent We have a smaller market, and likely few unique markets even if protection rises, people still can’t

make enough money from us to make a difference Canada represents only 2% of the world medical/health budget

o Recall that IP is a cost (in accessing knowledge: inventing around it, buying it, refraining from using it) and a benefit (exclusivity higher prices)

If I am doing research, patents represent a cost (in making new patents), and a benefit (in exploiting new products)

In Canada, the two halves are separated (cf. the US, where the cost and benefit are in the same market)

The Canadian patent market is what provides the cost (e.g., if the Harvard Mouse is not patented, I can use it for free), but foreign (mainly US) markets provide the benefits (of sale)

So: we want lower protection at home, and higher protection away (in this respect, we are much like a developing country)

We have very little domestic industry that is IP-dependent, given that we are a resource-driven economy; the only IP-dependent industries in Canada are mostly highly subsidised (biotech and aerospace are heavily subsidised, IT is subsidised)

This all assumes that IP works to drive innovationo So: extra patents effectively represent a cost to Canadian companies, that don’t bring any real benefit

theoretically, Canadians are better off with fewer patent rights, as long as we still have access to other (US, EU, Japanese, etc.) patent regimes

o TRIPS has apparently cost us $1B – we used to have free access to US patents, and now we’re paying for that knowledge; the reverse is not also true

Our loss of compulsory licenses ended up costing us Higher amount of US patenting in Canada more money sent offshore

o If we are minimally complying with TRIPS, so that we can avoid sanctions, we are best off making our companies more competitive by decreasing the cost of Canadian patent law while still maintaining higher levels in the US

We know that the US isn’t going to change, because its tradeoffs are internal We can then make a case-by-case analysis for further protection (e.g., we’ll sign X if you give us Y)

o Why doesn’t Canadian industry (esp. biotech) think like this?

f. Case Study 6: Creative Solutions (Patent and Copyright)Take-home: moving from IP as a model of obstructing others’ activities to IP as a positive enhancement of

accessibilityE.g., BC Cancer Agency has the data from all cancers in BC in the last many years; the richest database on cancer in the world

o Traditional means of licensing would be to sell access to certain companieso Instead, they chose to limit licensing: companies can get exclusivity to resulting drugs, but the Agency can retain

ownership over gained knowledgeo So: even by reserving rights to yourself, you can expand the public domain

If you think creatively about what each party actually needs, you might make all parties happy with the eventual distribution of resources

i. PatentPrice controlsHistory

o Created after abolition of Canada’s compulsory licensing regime, which had given a 4% royalty to patentholders; patent holders complained arguing that they were being subjected to a liability rule (no consent, but compensation for “damages”) rather than a property rule (ability to exclude)

o Compulsory licenses abolished everyone worried about drug prices; PMPRB (see below) establishedo Mission: if there is a patented on a medicine being sold in Canada, PMPRB as jurisdiction to control its price

If an old product is repackaged/reformulated, cannot sell it at a higher price than previously If a new product, cannot sell above the median price in 7 countries (US, UK, Switzerland, France, Japan,

etc.)o Essentially, a price control mechanism

Most countries have price controls on pharmaceutical productso France has much lower prices than we doo US has no controls doesn’t like our limits, arguing that we free ride on US consumers being willing to pay higher

prices, and because some Americans come here, buy medicines, and then go backo US agreed that, in exchange for Canada lifting its compulsory license regime, they would agree to our price control

regime, and had to agree to invest more in CanadaIs this a good idea?

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Those who support it say that we’re not touching the patent legislation, but instead override some aspects by

legislationo Cf. morality legislation: EU denies patents based on morality; Canada allows patenting, but then regulates

distribution/saleo So: Canada’s approach is to allow free patenting (i.e., not to touch the IP regime), and then regulate the

implications laterAdvantages

o Flexible: can address issues/products as they arise in particular areas; particularly helpful with regard to specialised agencies

o More certainty to patent law itselfo As long as the costs that the state imposes on the patent applicant represents the real cost of processing this

application, there is no waste, because the applicant is in the best position to assess the usefulness and feasibility of the patent application

o Fewer people/resources/etc. are expended on targeted legislation than on general legislationo TRIPS says you cannot discriminate between technologies; a regulatory scheme allows you effectively to do so

Discriminatory patenting is prohibited, but discriminatory sale regulation is not We already differentiate a little (see copyright variations for plays/songs/etc.) – but this allows for wide-

ranging and/or extreme differentiationo Responsiveness to division of powers in a federal system

Disadvantageso Potential efficiency losses: having a system to permit and a system to control could duplicate efforts

unnecessarily where there is a knowledge gap (e.g., big pharma can navigate through the system because it’s done it a lot, but a start-up may not be able to)

o For a particular applicant, it reduces uncertainty – but it may not do so across the systemo Different government departments may have different incentives or priorities (recall Health Canada and

Industry Canada in the Myriad case study, above)o Someone has to be negatively affected before the regulatory system would react

An integrated system would always ask the “is this morally right” question before even generating the patents

A regulatory system typically only responds to the disaster after it happenso Potentially less responsive in the short term (though perhaps more in the long term)o A regulatory system counts on the patent system to generate innovation – but then restricts the system further

discourages innovation?

PMPRB Annual Report 2006Independent, quasi-judicial party established by act of Parliament; operates at arms-length from ministerTrends

o Patented Medicine Price Index (PMPI): hospitals are paying less slight decline; varies by class of customer and across provinces/territories

o Foreign-to-Canadian prices slightly below parityo Slight decrease in R&D; downward trend in R&D-to-sales ratioo Basic research is 20% of R&D expenditures

Promoting voluntary compliance with Guidelineso Ensuring that prices aren’t excessiveo No authority over non-patented drugso Patentees required to file price and sales information twice a year for each strength of each dosage form; also

required to file R&D expenditures; required to tell PMPRB of their intention to sell a new patented medicine and get approval or price

Reviewing prices and taking remedial action when necessaryo New patented drug prices are limited, based on median of same prices charged in other industrialised countrieso Price increases tied to CPIo Price can never exceed highest price in other listed countrieso Investigation can lead to voluntary compliance undertakings

Failing which public hearings and remedial orders FC-TD decision in Leo Pharma Inc.: standard of review is reasonableness; PMPRB has broad discretion

Consulting with interested partiesFostering awarenessReporting

o To Parliament annuallyo Minister of Health can direct PMPRB to enquire into any other matter

Other solutions “sitting on top of patent law”We take it for granted that patent law exists, but then we try to encourage innovation through additional meansEvery company does this, sitting on its assets and deciding how to use its IP rights

o E.g., IBM moved from tightly holding its assets to making everything public, thus creating low-level revenue streams – but lots of them

IBM is every year the #1 patent applicant in the US – but they don’t prevent anyone else from developing products, as they don’t veto others’ use

This demonstrates again that IP rights are neither good nor bad – it’s what you do with themo The pharmaceutical industry has not reacted similarly

The next three proposals relate to pharmaceuticals and biotechnology, which are two industries that have not changed very much in their structure (cf. IT)

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o Troublesome aspects of this is that many essential medicines are thus unavailable to those in poorer parts

of the world Poor and rich people die from essentially the same things: heart disease, cancer, AIDS, injuries, etc. – it’s

just the proportion that’s different Things that used only to affected developed countries (e.g., obesity, type II diabetes) are now changing to

affect developing countries too There are some, however, that only affect developing countries (e.g., malaria)

o Many medicines either don’t get to those in developing countries, or arrive in the wrong form (wrong vector, address the wrong strain, etc.) – so the biggest problem is adaptation of technology

o Pharmaceutical companies don’t distribute in developing countries because they don’t have the networks, because these countries are less stable, transportation issues, access to patients, etc.

So: how do we create a set of incentives that work on top of and with patent rights?

Advance Market Commitments (AMCs)We can identify the product we want, and then say “here is what it has to look like” we try to mimic a developed world

market for that productIn the developed world, you can make $3B (ish) from a productYou group together a group of donors (governments, philanthropists, etc.) who are willing to “top up” the difference between what

a developing country can pay and what the patent holder usually receives in the developed worldSo: using the patent system exactly as designed, but in an artificial marketOnly works in a targeted manner

Gold, “Advanced Market Commitments”Basics

o Mimic the expected economic returns for a drug as viewed at the time the investment decision is madeo Fix an artificial price per does based on a promise to pay by a country, philanthropist, or combination of countries

and philanthropistso Promisors would establish criteria that medication/vaccine would need to meet, guaranteed per dose price and pool

consisting of a fixed amount of moneyo Importing country would pay a co-payment per dose; guarantors would top up the amount of the guaranteed per

does price until pool funds are exhausted –then the producer would agree to sell the medicine at a (lower) fixed price

o Like ordinary market: producer has no guarantee of the quantity it can sell; same uncertainties as any other producer faces except in respect of price

o Price competition focuses on co-payment amount and the post-AMC priceo Producer’s profit limited to total amount of payment it receives form the pool minus its development costs

Advantageso Mimics risk/reward profile of developing and delivering a new medicine/vaccine at the very point that

investment decisions are made; fits within existing market logico Does not challenge cost-benefit analysis that producers undertakeo Requires no change in standard business modelo Products require no marketing cost savingso Single-drug pool estimated at $3.1B; multi-drug pools range from $5.24B to $7.22B

Concernso Incentive to maintain the status quo at a time when pharma itself is questioning ito Relies on strong IP rights, existing research strategies and current distribution modelso Favours existing market actors over new entrants; no facilitation of market entry for low- and medium-income

country enterpriseso Based on the assumption that in the short to medium term the existing industry is best positioned to carry out the

innovation and development necessaryo Specific concerns about the types of medicines/vaccines that the mechanism can support

Important incentive to bring late stage medicines (usually vaccines) to market Difficult to establish certainty where there are no late-stage products against which to benchmark

technical standards and price ( underinvestment in those products?) Products outside AMCs do not face these difficulties, as pharma can set the price of the new medicine Response: IAVI has tried to adapt AMCs by suggesting an Independent Assessment Committee that could

waive technical specifications and change prices increases uncertainty for funders but decreases it for producers

Designo How to deal with second/third/subsequent products satisfying specifications?

If only first product is funded, limits development of improvements – but intensifies race to be first If subsequent products funded, AMC is more expensive, and must decide whether to fund all equally or

only those that demonstrate superior performanceo IAVA’s suggestion: must name respected and truly independent adjudication committeeo Ensuring “bindingness”: agreements may run into the decades; funders are bound just by offering the AMC

Ensuring funder compliance is easiest when they pay up front – but cash flow problems and no guarantee that funds will be managed well

Ensuring producer compliance: unclear who would bring the suit; could have funders obtain security interest in producers’ IP rights

Prizes

Love & Hubbard, “The Big Idea: Prizes to Stimulate R&D for New Medicines” of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Rather than giving exclusive rights, government would give prizes tied to actual impact of invention on improvements in

health care outcomes that successful products actually deliverShortcomings of current price incentives

o Current system of market monopolies increased 2006 drug prices by $400-480B Justified by stimulation of R&D – but we only get 9% of this (re)invested as R&D, so it’s inefficient Most new drug approvals are not very important medically – and the “me too” products are often more

expensive (clinical trials just for marketing purposes) So: in 2005, prices were $400-480B higher due to patent monopolies, in return for $51B in private sector

R&D, of which 1/2 to 2/3 were directed towards products of no medical significance Direst in developing countries Pharma often offers products in developing countries at high prices not because of re-importation concerns

but because profit-maximising prices are those that target only the eliteo Drug resistance: better to use new drugs only when old ones fail, but patent holders have incentives to encourage

new product useo Delivery systems: co-formulated products are discouraged by restrictive licensing policieso Prescribing practices: overinvestment in wasteful marketing activitieso Underinvestment in special health problems that disproportionately affect the poor

Prize systemso Divorce incentive for innovation from products’ price to consumers knowledge goods can go to

market immediatelyo Trade framework should no longer focus on standardised rules of minimum IP protection of drug prices instead

focus on agreements to support R&D investment, addressing free-rider problems, etc.o Primary “pull” incentive for private investment would no longer be marketing monopoly, but system of prizes

rewarding impact of inventions on health careo Innovations would enter the public domain, but innovators would profit when inventions provided benefits

to patientso Difficult to determine the amount of the prize

Amount of rewards could be determined by improved Quality Adjusted Life Years (QALY) US Rep. Bernard Sanders introduced H.R. 417 to establish a prize system

Budget set at 0.5% of US GDP Keeps patent system, but innovators only get patents up to point where product is registered for

sale prize fund replaces patents at this point Not a strict QALY proposal, but instead prizes have general rules for reward based on: number of

patients who benefit; incremental therapeutic benefit; addressing priority health care needs; improved manufacturing efficiency

Follow-on invention could replace existing medicine, but earlier product could still receive prize money

Size of prize fund can be increased/decreased, and has nothing to do with price of products themselves

Special “set-asides” for particular public health problems/needso Benefits

No restricted access to medicines because of high prices Drug manufacturers could sell any product Efficient companies with good reputations would have an edge Only evidenced benefits would generate rewards no unnecessary marketing of superfluous

medicines

Patent poolsBoth pools and clearinghouses are similar in that they work within the patent systemPatent holders license the technology into the pool, and then the pool licenses out the entire packageIn the past, pools were not used voluntarily

o Wright brothers and Curtiss had competing patents in the early aeroplane industry; couldn’t agree on who would produce an aeroplane no production during WWI, US government displeased told them to find a solution or that the government would issue compulsory licenses

o Early radio industry faced similar issues problems and lack of national defence developments rather than pooling patents, the companies created a new company (RCA) holding all the patents

Decline: the RCA structure couldn’t be replicated today, because they’re seen as anti-trust or cartels – though patent pools have been resurrected in some industries

Catalyst: the VHS/Beta competitiono Sony produced (higher-quality) Beta and held the technology tightlyo Panasonic produced (lower-quality) VHS and distributed the technology widelyo When movies came to tape, producers were more willing to make copies in the version that was distributed more

widelyo It was expensive for video stores to buy two copies of everything, and people wanted more access more people

and producers and stores switched to VHSo This is called “tipping,” when a market moves in a particular direction at the expense of another

Re-emergence: DVDso When DVDs came out, they wanted to avoid this type of competition, and to refocus on qualityo Everyone pooled their patents, so everybody had an incentive to join the pool (nobody wanted to end up like Sony)o People could be both patent holders and users at the same timeo You could imagine using a patent pool to establish market dominance several rules applied to prevent anti-

competitive activity To stop people dominating the licensing: anyone from inside the group could license

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) To stop people from sticking extra patents into the pool to withdraw more patent fees: independent

assessment of patents To stop people from keeping back the one “essential” patent and then charging a “ransom” for it: must

contribute all essential patentso When you license to the pool, it’s on a non-exclusive basis each patent holder can still license other peopleo So: you either participate fully or you don’t participate at allo Typically, each patent receives an equal share of the revenueso New technologies may be included and others may be kicked out, as technology changes – a continuous vetting

processo This system reduced the chance that you’d be locked into a technology standard in few years’ time that you

couldn’t get out ofo You could still have competing pools (e.g., DVD and Blue-Ray)o Competition law applies to all commercial activities; forces you into a particular structure that allows for equality of

all users in order to avoid anti-trust legislation and to avoid individuals advancing their own personal interestsMost common use of a pool is industry-driven, but other formulations are possible

o SARS patent pool Many organisations had bits and pieces of pertinent patents pertaining to SARS pool The pool still technically exists, but has little life, because:

SARS hasn’t come back impetus has disappeared No mechanism found to fund the start-up and administration of the pool

o Patent pooling and AIDS A system of airline taxes ($2 per flight) was used by UNITAID (European agency) and other organisations

to fund AIDS research/vaccine – but access to patents was difficult So European agencies started to look into other options enlisted Gold/Piper/Morin to address feasibility

of a patent pool the article that follows (a vastly shortened summary)

Gold, Piper & Morin: “Patent Pulls: Pooling Patents to Address Access to Medicines”Creation of a medicines patent pool for fixed-dose combination anti-retrovirals and paediatric forms of these medicines (for which

access is currently limited)Not yet addressed

o Novel but untested proposals: AMCs, public-private partnerships, prizes – difficult to mobilise resources for things that aren’t tested

o Patent pools have proved useful elsewhere could attract more supportShould concentrate on reducing costs of development and distribution, rather than increasing financial benefit of companies

that invest in R&DSpecific problems with HIV/ADIS

o Industry hasn’t been able to address need for FDCs and targeted formulations, despite substantial evidence of needo FDCs require combinations of medicines belonging to different companies competitors must cooperate (often

refuse for strategic reasons and to avoid anti-trust laws)o Failure to develop business models that would allow forms to profit from sale of low-cost FDCs and

adapted formulationsDescription of a patent pool

o Collection of patents need to produce a particular technologyo Licensed out to others (generic manufacturers, likely in developing countries like China, Brazil, India, etc.) in pre-

defined packages at a reasonable priceo For sale to afflicted developing countries that have no manufacturing capacitieso Discrimination is based on country where you want to sell, not country of manufacture no producer

discrimination (which would be contrary to purpose/success of patent pools)o Reduce negotiation costso Must rely largely on voluntary licenses from patent-holders; pools based predominantly or solely on compulsory

licences would be unworkable, as it would have no leverage to coordinate license terms, supervise production and reduce negotiation costs

o Advantages Pharma can demonstrate that IP rights need not be a barrier to access to medicines Redirects criticism of pharma towards pool administrators Positive publicity Profit from sales in otherwise-ignored markets

o Limitations No guaranteed substantial price reduction Industry must be satisfied that pool’s mandate does not expand to cover medicines for which pharma has

viable markets in developing countries Losing competitive advantage in developing countries by creating future competitors in the form of

generic companies licensed by the poolo Good management can overcome al these limitationso Must ensure that pool does not operate in high-income countrieso Royalties should be the same for every contributor to avoid judging which patents are the most importanto Just need political willo Unclear what the effect on prices would be [if you’re worried about prices, better to impose price controls]

not the best means to reduce prices – but it is the best means for “unblocking” an industrySum: creating a mechanisms to allow entities that have not historically worked together to create environment of trust and

collaboration

Clearinghouses of 80

Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)Radio stations don’t K with each artist; instead, they add the cost of what they’ve played and pay a fee to SOCANSOCAN is an example of a clearinghouse, which collects licenses and relicenses themThis is different from a patent pool, which offers a fixed package

Graff & Zilberman, “An Intellectual Property Clearinghouse for Agricultural Biotechnology”Effectiveness of patent system turns on (1) definition of what is patentable and (2) mechanism to trade in patent rightsCommon-pool nature of agricultural knowledge and genetic resources lost in subdivision among multiple private property claims

reduced public benefits, sapped power to innovate, dampening of research, patent thickets (“tragedy of the anticommons”)Much criticism of patent systems have focused on (1) above, but there is room to manoeuvre with (2)Accessing IP in a congested landscape

o Historically: IP congestion government intervention to create “collective rights organisations”, or occasional private-led consortia that organised patent pools

o Patent pools can provide pretext for unhealthy degrees of collaboration anti-trusto Private collective rights organisations have been more economically efficient than government-invoked solutions

more savingsAn IP clearinghouse for agbiotech

o IP clearinghouse would reduce transaction costs and other market failures that hinder IP exchangeo 3 essential functions: identifying all relevant IP claims over a technology; matching buyers with

sellers; monitoring and enforcing Kso Ideal IP information needs user-friendly data structure and indexation, analytical cools, identification of patents’

current ownership/status/availability, indicators of patent valueo These capacities are costly, but are already marketed through some licensing services (which are, however,

limited)o IP clearinghouse would bring comprehensiveness/specificity; independence/neutrality; bundling multiple

complementary patents into micropools; provision of regulatory/biosafety informationo Clearance must be negotiated in each system separately

Potential userso University offices of technology transfer resort to offering exclusive rights when they would prefer multiple licences

clearinghouse could helpo Leading multinationals have been changing their licensing policieso Secure outlet for technology, or source of complementary technologyo Encouraging developing me research capacity

If likelihood of breaking even in short term is insufficient to induce private investment, people might consider innovating

ii. CopyrightLessig, “Commons Among the Wired,” c. 4The commons of those building the internet has 3 aspects: commons of code, commons of knowledge, resulting commons of

innovationLessig aims to explore nature of the culture and nature of the codeCode is content, and in birth of the Net much of the content was freeFree content as cruel to building and supporting new contentIntroducing the commons

o Today, computers run on software; at first, no one cared about controlling software each company had own OS little reason to worry about “theft” of programs

o AT&T purchased many computers to run a national phone network, but was forbidden from making own computers frustrated that computers couldn’t talk to each other

o Bell Labs researchers began an OS that could be “ported” to every machineo Then, wanted a cross-platform-compatible language birth of Unixo AT&T made its OS and then gave it away; universities took it first, made fixes, and recontributed Unix as a

commonsChanges in the commons

o Openness of commercial code began to changeo Companies producing these products exercised more control the code “forked”o MIT researcher Richard Stallman objected founded Free Software Foundation to encourage development of

software that carried its source with it (sought a commons for code)o AT&T decided to exercise control over Unix many felt betrayed, as if their contributions were now denied themo Computer science student Linus Torvalds stated playing with Minix combined with Stallman’s work GNU/Linux

was born, and it came with its source so others could tinker with it became very goodo GNU/Linux as “open code” project, bustling commons of code, knowledge, and innovation on the codeo Just one example of a large number of open code projectso NSCA developed HTTP’d server, with only requirement for use/modification being that NSCA be given credito Others began to develop patches for the NSCA server Apache server released as a free, open source server that

is now number oneo Those who developed Apache worked on it voluntarily and part time; other developments were similar (e.g., BIND,

sendmail, etc.) “soul of the Internet” developedo So: free code built the internet; collection of code built outside the proprietary model

Building a commonso Free code builds a commons lowers cost of innovationo Builds a commons in knowledge, which is nonrivalrous (not zero-sum)o Every major Web browser has a function that reveals HTML source code easy to learn how to build a web page

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008)o A closed system could have become the norm ( smaller commons), but an open system was chosen ( could

grow more quickly)o Free code at the content layer builds a common in innovationo Law protects the innovation commons that open code built

The lawo Combination of copyright and contract protects the innovation commons built by open codeo Copyright attaches to any creative work at time of fixationo If author couldn’t control copies, no way to profit from work copyright strikes the compromise of a limited

right, which is then licensed by contractso Original open code license was the “General Public License” (GPL)

Limits restrictions on copying that a licensee can make (cf. most licences, which limit copying) Copyrighted work licensed under GPL is always available to others to use/modify, as is the derived code

GPL code is “free”o Linux licensed under GPL source travels with it

Proponents say that users are not hostage to open code projectso Smaller claim: users/coders can tinker with the codeo Larger claim: openness assures foundation of computing environment is neutral and can’t turn against the

innovator 1991: Gates realised that future would be a world with one GUI-OS MS had to switch, but couldn’t lose

customer base had to “hold the field” had to ensure that no one would steal its OS customer base used its power over Windows to avoid competition with DOS made it impossible for competitors to gain foothold in MS base

Government filed notification of anti-trust suit; MS signed consent degree instead government announced that it had made the world free for OS competition, but MS believed that it would have no real effect

MS was right: all competitors for MS’s OS disappeared 1995: Gates heard about the Internet, and saw it as the next threat had to hold the field with Windows

95 users until MS could develop network-based application suite linked MS browser to underlying OS and gave the browser (IE) away by integrating it into the OS

Government filed suit that continued at time of writing MS was accused of strategic behaviour, of using its power over OS to kill threatening innovation MS OS has been a boon for innovation – but may have chilled innovation because its OS is closed So: MS’s power is the very power that open code doesn’t have; open code can always fork, thus collapsing

projects; possibility of forking keeps pressure on guardians of open code project to develop project such that broadest range of users wants it (“democracy brought to code”)

So: users of open code project are not hostages to bad code or to strategic code innovation commons that the Internet creates

Challengeo Assuring that there are sufficient incentives to build open codeo Assuring a sufficient incentive to supply new/improved code (i.e., provisioning problem)o Must work as empiricists, not ideologues: much open code being writteno 1998: IBM decide to dump own server and embrace open source Apache server

Committed own resources to support development of Apache and Linux – why? IBM sells more equipment if software that runs its equipment is better support of free software adds to

value of sold equipment IBM adds services on top of the equipment it sells If IBM were to fork Apache, would keep a greater costs in keeping forked version up to date as server

functionality improved makes sense to support open coding, even if it can’t capture full value of code it contributes

o Most production in society happens with no guarantee of government protection Patent rights are limited and market is quasi-transparent innovators can’t keep ideas to themselves But innovators innovate anyways, despite that competitors might take their ideas Market produces enough of its own incentive fact that others can free-ride doesn’t kill innovation

o Same lesson being relearned in context of code; not that systems of control are bad, but no necessary inference that some control is good and more is better

Sumo Open code lowers barriers to entry for innovatorso Protecting a neutral platform assuring developers that platform will remain neutral in the futureo Balance between free and controlled resources is precisely the balance that law must strike in IP

contextso Keeping a resource in the commons increases its value because others can draw on it and because it

mitigates number of strategic games playedDiscussion

o Shows that strict IP regimes are not necessary to encourage creativity – but instead of addressing the reason why, he asks what we do now

o People can give away their innovations through good will or through a belief in opennesso But if you don’t copyright your little piece of information, it can be incorporated into others’ innovations – which

those others can then copyrighto But copyright doesn’t have to be the sole means of protecting works GPL (a “viral license”)

The producer of anything made with a GPL-licensed product is obliged by K to relicense his product for free If someone wants to create something proprietary, they thus cannot use anything GPL-licensed

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Intellectual and Industrial Property (Gold) Dorian Needham (Winter 2008) They can create separate piece of software that work with GPL-licensed software, services that integrate

GPL-licensed software with other software, etc. – so there are other ways to make money “around” a GPL license

Thomson, “New Business Models in Music”(chart of various models)

Doctorow, Down and Out in the Magic KingdomPreface to 2nd edition

o Original licensing of the book was conservative and restrictiveo Writers usually taught that maximal copyright is what stands between them and povertyo Relicensing under less restrictive Creative Commons license (Attribution-NonCommercial-ShareAlike license)

Attribution: reader must give the original author creditor NonCommerical: reader can noncommercially distribute/display/perform the work, or “remix” the book

(derivative works) ShareAlike: reader can only distribute resulting work using the same license

o (long reproduction of the license)Preface to 1st edition

o As described aboveo No derivative works permitted

(reproduction of Prologue and Chapters 1-3)Discussion

o You can only move to increasingly unrestrictive licenses; you can’t retract a more open license once it’s “out there”

o Original license was more restrictive, reserving all commercial use and preventing alterationo Second license was significantly more permissive, allowing extensive alterationo As the author, you have considerable control over how far you’re willing to cede your materials to the public domain

– you use K law backed by copyrighto So: copyright law is now used not to restrict access, but to promote accesso Creative commons is moving to representing given rights (or packages of rights) with symbols, that are then

correlated with a “legend” in which the symbol is explained fullyo Ability of individual authors to enforce his licenses legally is questionable – but it is arguable (recall the French

Chefs article) that norms can protect authors better than laws

DiscussionIP licenses can be used not to keep others out, but instead to form relationships, as a lever to form relationshipsRevenue comes then not from exclusivity but from a broad networkThe traditional approach is breaking down: it doesn’t work in music industry; it’s failing in the pharmaceutical industryThe real question becomes how one uses IP to achieve one’s goalsSo far, GPLs work for copyright, but less for patents

o Copyright is free, so using his IP rights in this particular manner doesn’t really cost him anythingo Patent costs a lot (per country), so if the only question is then how to make it available, the costs don’t make sense

(i.e., you can’t force someone else to make it available for free)o BIOS in Australia are trying to create some kind of creative commons in science, as are other organisations – but

they all encounter the same problem; the translation of open source to open science has not worked well yetIt could only work if people all give up IP rights together and simultaneously, if they find other motivations for doing what they’re

doingo Cf. the French chefs we looked at in our first classes, who look at reputation as a powerful motivatoro Doctorow’s story highlights this same idea of reputation (“whuffie”) as a motivator, as some kind of currency

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