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When is an idea protectable? This question is front-and-centre for many entrepreneurs. When can they discuss their business idea, invention, or brilliant screenplay?

This story relates to the protectability of ideas under the law of copyright. Basically, there is no protection under copyright law for an idea itself, only the particular form and expression of that idea. This was illustrated last week in Elijah Schkeiban v. James Cameron et al (Case No. 2:12-cv-00636, California Central District Court), where the plaintiff claimed that Mr. Cameron’s blockbuster Avatar film infringed copyright in Elijah Schkeiban’s screenplay entitled “Bats and Butterflies”.  In this case, the plaintiff alleged that certain character traits and plot elements were copied by Cameron. These broad elements of a story - good guys vs. bad guys, or flawed protagonists - are precisely the things that are not protectable. The case was dismissed.

It is important to note that courts will review elements of expression such as plot, themes, dialogue, mood, settings and characters, to determine if infringement occurs.

Compare this to earlier decisions that we reviewed here: (Copyright: Apps and APIs; Tetris Holding LLC v. Xio Interactive, Inc.) in which the court decided that the look-alike game Mino did infringe the protectable “look and feel” of Tetris; also see Dath v. Sony Computer Entertainment America Inc., where the US Ninth Circuit Court of Appeals upheld the lower-court decision in a copyright infringement case involving the Sony PS2 and PSP title “God of War”. The plaintiffs alleged that Sony infringed copyright in their written works about war between Sparta and Athens. No infringement was found in that case. (Reviewed in App Law Round-Up.)

Want to know who James Cameron really copied? Go see Fern Gully.

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For our readers in (beautiful) Western Canada, forget about those supposedly “sexy” global smartphone wars - this case is a battle of the brands, Canadian style. A hardware store versus a drug store.

The case of Home Hardware Stores Limited v. London Drugs Limited, 2012 TMOB 107 (CanLII) pits competing brands that use the generic term “HOME”. Some of our readers may not recognize the London Drugs brand, which is a Western Canadian chain of stores that sell a little bit of everything, from housewares to computers along with a pharmacy. Home Hardware, of course is a national chain of hardware stores. When London Drugs applied to register its LONDON HOME trade-mark (at right), Home Hardware opposed, citing its “family” of several dozen HOME marks, including the HOME design (at left), and such marks as HOME WARES, HELP IS CLOSE TO HOME and ALL ROADS LEAD TO HOME. There was certainly overlap in the list of wares, and both are sold through retail channels to similar consumers.

The test for confusion in Canada is one of “first impression and imperfect recollection.” In Canada, one trade-mark causes confusion with another trade-mark if the use of both marks in the same area would lead a consumer to believe that the products associated with those trade-marks are made or sold by the same company. The test for confusion requires an analysis of “all the surrounding circumstances” including:

• the inherent distinctiveness of the trade-marks and the extent to which they have become known;
• the length of time each mark has been in use;
• the nature of the products or business;
• the nature of the trade; and
• the degree of resemblance between the trade-marks in appearance or sound or in the ideas suggested by them.

After looking at these factors, and the fact that are at least 50 other Canadian trade-mark registrations incorporating the word HOME as the dominant element for similar products, the court concluded that consumers are accustomed to seeing multiple HOME trade-marks in association with the these types of products. Therefore, confusion between the two marks was considered unlikely and the opposition was dismissed. London Drugs prevailed in this battle.

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In a Facebook app called “SuperPoke! Pets”, players adopted virtual pets and acquired or purchased virtual currency to buy things for their virtual pets. As one of the first Facebook apps, the game took off in popularity after its launch in 2008. The game was acquired by Google in 2010, but was eventually discontinued at the end of 2011, leaving users without access to their accumulated virtual pets, currency and pet accessories. Users attempted a class-action suit against Google for “elimination of users’ money, goods and property.”

Google defended the class action by citing the dispute resolution clause, which compelled arbitration. In Abreu v. Slide, Inc., 12 0042 WHA (N.D. Cal.; July 12, 2012), the court confirmed that for an arbitration clause to be unenforceable, it must be both “procedurally” and “substantively” unconscionable. Essentially this means that an unenforceable clause would be oppressive due to unequal bargaining power between the parties, or would lead to “overly harsh or one-sided results.” As the court phrased it, the clause must be so one-sided as to “shock the conscience.”

In this case, the clause was upheld, and the dispute was sent to arbitration to be resolved.

Lessons for business?

• When drafting online terms, ensure you get advice on the dispute resolution options.
• An app developer or game publisher may be tempted to stack the “Terms of Use” in their favour, but these terms must be balanced. The inclusion of harsh or shocking terms in the fine-print may put the entire agreement at risk of being declared invalid and unenforceable by the courts.

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Can a prior disclosure of an invention be fatal to a patent? And if so, what constitutes “disclosure” of the invention.

One of the central pillars of patentability is “novelty” - the invention must be new, the first of its kind in the world. If it’s not new, the patent application will fail or (if discovered after the patent has issued) the patent itself can be invalidated. Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2011 FC 1323 (CanLII) is an interesting judgement dealing with a device that was manufactured and rented to a third party for use in drilling an oil well in Texas prior to the relevant date of the Canadian patent. This earlier device invalidated the patent, since it constituted an “enabling disclosure” of the invention more than 12 months prior to filing of the patent application. In this case, to prove when the earlier device was invented and disclosed, an expert was called in to examine the metadata for the design drawings, to verify when the drawings were created.

The business lessons?

• Remember that a prior disclosure of an invention can be fatal to a patent. For the purposes of patent law, a “disclosure” of the invention can be as simple as using the invention or a prototype for a customer. For example, putting a single device into the hands of a customer without restrictions or confidentiality obligations has been held to constitute prior use which invalidated the patent.
• Experimental use of the invention may be permitted in certain circumstances. True experimentation will not be considered a “disclosure” for these purposes. However, a use will only be experimental if it is so in the mind of the user.
• If disclosure of the patented device was made on a confidential basis, it will not be considered a “disclosure” for these purposes, if handled properly. Therefore, confidentiality (and a properly drafted non-disclosure agreement) is critical.

Related Event: Interested in learning more? Join us on September 26, 2012 - Field Law is hosting a meeting of The Licensing Executives Society  (Calgary Chapter) on the topic of: The Perils of Disclosure: Invention Disclosure and Patent Grace Periods presented by Roseann Caldwell, Bennett Jones LLP. See link for details and registration.

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