Some people take their whisky seriously. The Scottish Whisky Association takes the topic very seriously. They were concerned that the use of the word “Glen”, in connection with a Canadian whisky, would mislead consumers into thinking the drink was from Scotland. So concerned, they sued Glenora Distillers, the Canadian distiller of GLEN BRETON whisky all the way up to the Federal Court of Appeal. 

For lawyers, it’s a trade-mark issue: Has the word “Glen” in association with “single malt whisky” become recognized in Canada as designating Scotland as the origin of whiskies? In a decision last year (Scotch Whisky Association v. Glenora Distillers International Ltd. 2008 FC 425 Date: April 3, 2008) the court agreed with the Scotch Whisky Association, and decided that the word “Glen” would confuse consumers.  The court refused to permit Glenora to register the trade-mark GLEN BRETON for single-malt whisky. 

Last week, the Federal Court of Appeal reversed that decision and agreed with the distiller. It’s worth noting that the product is not marketed as “scotch”, but as “Canada’s only single-malt whisky”. The appeal judges decided that the word “Glen” would not mislead consumers, and permited the trade-mark application to proceed. The Scotch Whisky Association is rumoured to be considering an appeal - this time, all the way up to the Supreme Court of Canada.  If they do appeal, the next decision won’t be expected until sometime in 2011, about 8 years from when the contest began. Just enough time to permit the bottling of the next batch of GLEN BRETON 8-year-old single malt.

Calgary - 10:45 MST 

In December, the Free Software Foundation (FSF) launched a lawsuit alleging that Cisco has breached the terms of the GNU GPL and LGPL (the General Public License and Lesser General Public License), thereby infringing copyright in the licensed programs. For more information, see the press release and a copy of the complaint filed by the FSF.

Last year in Jacobsen v. Katzer (US Court of Appeals for the Federal Circuit, August 13, 2008), an appeal-level court considered the ability of a copyright holder to distribute software under an open source license, and also obtain a remedy for any breaches of the license terms. In the decision, the court overturned the lower-court decision and decided that the open source license did not permit a licensee to modify and distribute the copyrighted materials without abiding by the copyright notice and modification-tracking conditions.  The case was sent back to the lower level for reconsideration, but it makes clear that:

• the licensor enjoys “economic rights” under the open source license; these “economic rights” come in the form of various intangible economic benefits, even in the absence of traditional royalties or license fees, and
• a licensee is not entitled to disregard the conditions attached to open source licenses.

In early January, a new ruling was issued by the lower court in Jacobsen v. Katzer.  Since the plaintiff failed to specify any damages, the contract claim was dismissed. The court also denied the injunction application (which would have barred Katzer from using the open-source code), on the basis that irreparable harm had not been established.  This shows that open-source licenses will always bump up against the practical realities of commercial litigation: to get a remedy, plaintiffs will still need to show damages and convince the court of the need for an injunction, just like in any lawsuit.

Canadian courts have yet to consider open-source software issues directly, but Canadian law will draw upon this growing body of American caselaw when the time comes.

Calgary - 10:00 MST

Lawyers are often criticized for arguing over semi-colons and prepositions. Here is one case where the word “of” and “in” were debated up to the Ninth Circuit Court of Appeal.

In the recent decision in Doe 1 v. AOL LLC, 2009 WL 103657 (9th Cir. Jan. 16, 2009), AOL was sued in California in a class-action suit.  AOL tried to deflect the California lawsuit based on the “venue selection clause” in its online member agreement.  That clause stipulated that lawsuits had to be brought in the State of Virginia. However, the court refused to uphold the agreement because Virginia state courts do not permit class action lawsuits.  The phrase in the agreement referred to “the courts of Virginia”, which the court interpreted as meaning state court - the equivalent of our provincial courts. If it had referred to “the courts in Virginia” then the court may have agreed with AOL’s argument that this would include both state and federal courts.  In that situation, the agreement would have been upheld, since federal courts permit class action lawsuits. 

The Canadian case of Desjean v. Intermix Media Inc. [2007] 4 F.C.R. 151 (F.C.), also deals with the issue of jurisdiction.  In that case, a Canadian internet user tried to launch a class-action lawsuit against Intermix Media Inc., a California-based company.  The  complaint alleged that spyware and adware were bundled with free software downloaded from the Intermix site.  Intermix did have an online license agreement and defended by arguing that the Canadian Federal Court lacked jurisdiction over Intermix and that the license agreement chose California law. In other words, Intermix argued that there was no “real and substantial connection” between Canada and Intermix. Specifically, the American company had no offices, employees, servers or bank accounts in Canada, and conducted no marketing or advertising in Canada.  The Federal Court agreed with Intermix and the Federal Court of Appeal upheld this decision. 

One more e-commerce case: in Mehmet v. Paypal, Inc., 2008 WL 3495541 (N.D. Cal. Aug. 12, 2008). the court upheld the consequential damages waiver in PayPal’s user agreement. 

The business lessons:

• ensure your online agreements are enforceable; 
• in Canada, laws in Ontario and Quebec deal with online agreements and the right to institute class-action proceedings, so special care should be taken where online customers are located in those jurisdictions;
• the venue selection clauses in online agreements may have to be reviewed in light of the AOL decision;
• even for free downloads, an online license should be put in place to address jurisdiction issues.

Calgary - 11:15 MST

To follow-up on our post last year [IP and Internet Law in 2008 ], here are a few issues to watch in ‘09:

US Patent Reform 

Although the US Patent Reform Act of 2007 stalled in the US Senate in 2008, it is expected to be brought back onto the government agenda in 2009 as part of the Obama administration’s plan for innovation.  Look for this to be moved forward once the burning economic issues have been addressed. 

Filesharing 

The recording industry tried multiple tactics in 2008. They pursued file-sharing sites rather than individuals. Their lawsuit against Quebec Torrent resulted in a win-by-default, and it is likely that they will pursue other file-sharing sites in Canada, citing this as a precedent. As expected, the recording industry also made a move against individuals using new anti-piracy legislation.  This trend can be expected to continue in 2009. 

Canadian Copyright Reform

While the government continues to grapple with economic and constitutional issues, it is unlikely that copyright reform will be high on the list.  If we do get a revised copyright reform bill, debate can be expected to drag on until the end of the year. 

Olympic Marks

With the 2010 Olympics coming to Canada in a little over a year, ambush marketing and Olympic advertising will likely generate lots of interesting trade-mark disputes.  As seen in Beijing, the efforts of the Olympic “trade-marks police” will bring this issue to the fore, and will provide an opportunity to test the new Olympic and Paralympic Marks Act.

Calgary - 2:45 MST