The long-running battle between two of the app industry’s biggest players has settled: Zynga v Playdom (acquired in the summer by Disney). This lawsuit, in many ways, illustrates the battle for dominance in a highly competitive industry like app development, and included allegations against former employees of misappropriation of trade secrets, breach of contract, and breach of the duty of loyalty… even a threat of a jail time for one of the employees. For a more staid Canadian equivalent, see: RBC v. Merrill Lynch. That case dealt with bank employees, so it lacks the flair of social gaming, but is a good Canadian example of the duties of departing employees.

Related reading: Departing Employees & Trade Secrets

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Should Canada develop a national clean energy strategy? 

There have been calls for a coordinated national approach to leverage Canada’s ability to compete for investment in the clean-energy market, which was worth over $160 billion in 2009. Earlier this year, a report was released to review the rationale for national coordination on this issue [Link to Report: Towards a National Clean Energy Strategy].

Momentum is building: for example, part of this national investment in cleantech is underway through the federal incentives and investment in clean technologies, including through SDTC (Sustainable Development Technology Canada). Alberta has the potential to leverage its own expertise in energy development to take a lead in this arena and Alberta companies have cornered 15% of SDTC funding. The Alberta government also offers various incentives in the biofuels sector (the Bioenergy Producer Credit Program) as well as funding for GHG-reduction technologies through the Climate Change and Emissions Management Fund. CIPO’s recent announcement about a fast-track program for cleantech patents also helps Canada keep pace with the US, UK and South Korea.

Related Reading: The National Post interviewed Richard Stobbe for an article on the plan to fast-track cleantech patent applications: “Canada plays catch-up on cleantech patents“

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My article on the Legal Implications of App Development [Download Copy of Article (2MB PDF)] is published in the November 19th edition of The Lawyers Weekly. It discusses “app law“ issues such as end-user licensing, copyright disputes, app-related trade-mark issues, trade-secrets, privacy and app development agreements.  [Link here for a preview of the digital edition]

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The proposed Climate Change Accountability Act was passed by the House but killed in the Senate on Wednesday, marking an end to this attempt to set Canadian targets for atmos­pheric greenhouse gases. The bill also touched on funds or incentives for technology that could be implemented to reduce GHG emissions and the establishment of a federal carbon-credit trading scheme.
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In our post last month [Business Method Patents in Canada ], we noted the groundbreaking decision that upheld Amazon’s 1-click patent, and established that business methods are patentable in Canada. It now appears the Commissioner of Patents has decided to appeal that decision. The uncertainty is back. Businesses will have to wait until the outcome of this appeal to determine the scope of patentability of business methods in Canada.

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One company files a Canadian trade-mark application for IREWARD based on “proposed use” for a customer loyalty program. In other words, they intend to use it, but haven’t yet launched their service. However, they know that when they do start using the mark, they’ll benefit from their October 15th filing date.  A month later, unaware of the first mark, another company files an application for IREWARDS, a mark that is virtually identical, also for a customer loyalty program. This time, it’s based on actual use of the mark.  They have a November 16th filing date, meaning that they arrived at the trade-marks office one month later than the competing mark.

So, who wins?

Both marks were filed in 2001. After a lengthy battle, the decision in Indigo Books & Music, Inc. v. Preferred One Inc., 2010 TMOB 100 (CanLII) was recently handed down.  Indigo (a Canadian retail book store chain) was the later applicant for the IREWARDS mark. They commenced substantial use of their mark immediately, expending millions of dollars in advertising, merchandising and promotion.  Preferred One, the original applicant for the IREWARD mark never commenced use of their mark. Indeed, they put their program on hold when they found out that their opponent was a powerful national retailer.  This proved to be fatal to their mark.  Indigo eventually won the case since they could show that Preferred One’s mark was confusing with their mark as of the date of the opposition in 2004, by which time Indigo’s IREWARDS brand was firmly established across Canada.

Lessons for business?

• Search With Caution: Indigo conducted trade-mark searches before they filed. But their searches did not disclose Preferred One’s earlier IREWARD mark, since that application had not yet been indexed by the trade-marks office database. There is a lag of several months before marks will show up on search results. Thus, it is important to remember that searches are important, but not perfect due to this lag time at the trade-marks office.
• Invest in Your Brand: This case was really determined by the business realities of Indigo’s brand investment. If they had not invested so heavily in the promotion of their mark, they would not have been able to show distinctiveness at the relevant date.

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The Canadian government’s proposed reform of the Copyright Act has passed “Second Reading”. For those of you who are a little rusty on your Canadian parliamentary procedure, this means that Bill C-32 will next go to committee for analysis and debate. Everyone will try to score political points in committee. After that, the Bill may proceed with or without amendments, or in theory it could still be killed after the committee stage.  The digital lock provisions are still among the Bill’s most contentious issues. 

While we’re on the topic of legislation, Bill C-28, the government’s long-overdue Anti-Spam Bill, has passed the committee stage and is being sent back to the House of Commons for “Third Reading”.

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Here are two more interesting cases involving apps for sale through the App Store. These cases arise from an alleged breach of open source software licenses. In this case, the open source code was licensed under the terms of the GPL. When GPL-licensed code is used or embedded in an iPhone app, does the licensing of that app through Apple’s iTunes terms and conditions result in a breach of the terms of the GPL? 

• In the first case, relating to an OSS application known as “GNU Go”, the Free Software Foundation complained that the licensing of the iPhone version through the App Store was a violation of Section 6 of the GPL. In response to the complaint, Apple simply removed the app. the FSF complains that Apple’s remedy is to “disappear” the app (as though they are a military junta… some might take that view), rather than licensing the app under the GPL.
• The second case involves the VLC Media Player, an OSS application ported to the iOS platform. Again, there was a complaint and an allegation of copyright infringement against Apple, on the basis that the GPL was breached. This app is (as of early November) still available in the App Store. 

Apple is not blind to the issue. In fact, Apple’s agreement with its developers is clear that apps should not violate the terms of any open-source licenses, and the developer will be liable for any such violation. One idea is for developers to invoke their contractual ability to use their own end-user terms, and insert the GPL at that juncture, subject of course to the mandatory terms imposed by Apple, that all end-user licenses must contain.  This would be up to the developer to implement, not Apple.

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Last year, app-developer Storm8 made headlines when allegations surfaced that it gathered the phone numbers from its end-users’ phones without authorization, through software built into its iPhone apps.  The case of Turner v Storm8 LLC, (Case No. 09-cv-05234-CW) (N.D. Cal.) represented a nationwide class of persons who downloaded and accessed Storm8 games. That class action has now reached Settlement.

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Today the Canadian Intellectual Property Office (CIPO) closed its 30-day comment period on proposed changes allowing for fast-tracking of clean tech patent applications. CIPO currently permits expedited examination of a patent application upon request and payment of a fee. The Patent Rules will be amended to expand the existing criteria to allow accelerated examination of patent applications relating to “green technologies.”  There is no definition of “green technologies”. To take advantage of the fast-track program, applicants must submit a declaration as to the technology’s ability to “resolve or mitigate environmental impacts or conserve the natural environment and resources if commercialized.” No additional fee would be required.  It will be interesting to see how the process will ultimately be implemented, how declarations will be scrutinized, and how much quicker examination will take place. No additional CIPO resources have been committed to this program, so it remains to be seen whether success in expediting a high volume of green technology inventions will draw resources away from routine examinations.

With comments closed, the changes to the Patent Rules can proceed to the next stage. Canada will then join the US, Australia, Israel, Japan, South Korea and the UK in a fast-track program for cleantech patents.  The USPTO is also planning to extend and expand its own “Green Technology Pilot Program“.

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