Internet Trends

User-generated content (not only from blogs and YouTube, but also from Reuters and the BBC) is on the rise. 

As users continue to mash-up their own content with content borrowed from elsewhere, the intellectual property fur will continue to fly.  Expect copyright battles, trade-mark skirmishes and technological protection measures to make headlines as ordinary citizens test the boundaries of  “user-rights” vs. copyright.

Trade-marks 

There are not too many areas of the economy where branding and corporate identity are not a critical issue.  The Supreme Court of Canada weighed in on two significant trade-mark cases in 2006: the court reviewed “famous marks” in the Barbie case (Mattel Inc. v. 3894207 Canada Inc), and in the case of Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltee.  Trade-marks will continue to overlap with internet law and inter-jurisdictional issues, as we have seen in cross-border disputes such as the Pro-Swing vs. Elta case.

Domain Names 

Trade-mark owners can’t rest as domain name battles become a full-time occupation.  Some developments are helpful: WIPO issued its Overview of Panel Views which serves as a useful guide for those engaged in UDRP disputes.  Other developments are less encouraging: consider how the click-through ad-revenue system favours cybersquatters who can turn a quick profit from domain names which capitalize on the reputation of brand owners.  Microsoft’s battle with these cybersquatters will be interesting to watch as the law continues to play catch-up with technology.

Thanks to all of our readers in 2006.  We will continue posting in 2007.

Calgary - 09:25 MST

Lawyers are known for looking back, but we prefer to look ahead.  Here are some themes and developments in the rapidly evolving world of intellectual property and internet law. 

Copyright 

The courts were busy in 2006 in the copyright arena.  We can expect a few more important decisions (such as the appeal of the Toblerone copyright case) to go to the Supreme Court of Canada in early 2007.  One important theme in copyright is the attempt to use copyright to protect areas which aren’t the traditional domain of copyright: in the Toblerone case, the copyright holder succeeded. In the case of Plews v. Pausch 2006 ABQB 607, an Alberta graduate student attempted to use copyright to protect mere ideas and theories, and lost.

Privacy

Privacy is not within the realm of intellectual property but it almost always overlaps with technology issues.  Besides the regular reports of missing laptops and hacked data, consider two cases: One, the infamous Sony Rootkit case, in which Sony CDs embedded hidden software on the hard-drives of customers as part of the company’s copyright protection strategy.  The strategy landed Sony in a hornet’s nest of privacy issues.  Class action settlements were finalized in 2006. 

Second, consider the Alberta case of Doctor Dave Computer Remedies.  In that case, the Alberta Information and Privacy Commissioner found that Doctor Dave Computer Remedies used and disclosed the Complainants’ personal information (including names, email addresses, mailing addresses and phone numbers) contrary to the Alberta Personal Information Protection Act by posting that information on websites. 

Privacy issues will continue to be front and centre in 2007 as Parliament continues its review of PIPEDA, while other technologies, such as RFID tags, continue to raise privacy concerns.

IP Litigation

In 2006, the courts helped clarify enforcement issues for IP litigators.   In decisions such as Celanese Canada Inc. v. Murray Demolition Corp., an industrial espionage case, the courts helped clarify the boundaries for the use of Anton Piller orders in civil cases where evidence is being seized.  The cases of Pro Swing Inc. v. Elta Golf Inc. and Disney Enterprises Inc. v. Click Enterprises Inc, dealt with the enforcement of foreign judgements in Canada.

Calgary - 13:17 MST

As our market-driven society evolves, branding will present an ever-growing challenge.  How do you distinguish yourself from a field of competitors and navigate through the minefield of existing trade-marks?  

Samsung tried to do that in early December when it launched its new BlackJack, a “smart” phone with email capability and QWERTY keyboard.  Competitors noticed.  In particular, one little Canadian company that makes a “smart” phone with email capability and QWERTY keyboard that you may have heard of: BlackBerry.  Last week, RIM sued Samsung for trade-mark infringement. BlackJack and BlackBerry.  Confusingly similar?  A California court will decide.  The lesson for business?  You better have a high degree of confidence in your trade-mark before you spend millions launching that next product.

In August 2006, Microsoft launched a series of lawsuits in the U.S. against alleged cybersquatters.  This in itself is not necessarily newsworthy, considering the number of battles Microsoft and other famous trade-mark owners have to fight on an ongoing basis to protect their trade-marks online.  In this case however, the sheer volume of registrations was noteworthy. The cybersquatters had registered hundreds of domain names which were variations and common misspellings of Microsoft’s trade-marks, such as microsoftnewssource.com, msninfoonline.com, freewindowslive.com and msnblog.com. 

This brand of cybersquatting might be called “next generation” since it doesn’t rely on the traditional method for profiteering.  Instead of making money by selling the infringing domain name back to the rightful owner, or to a competitor, the domains have value because of their ability to generate per-click ad revenue.  The infrining domains are parked at a generic page which lists ads, all of which will generate revenue when misdirected visitors click through in the search for the legitimate site or page they were looking for.  Multiply this by hundreds of domain names and bingo, you’ve got yourself a profitable side-line, all based on ad-revenue. 

The ad-driven frenzy is reflected in ”domain kiting“.  Domain kiting or domain tasting is the practice of registering a domain name speculatively and testing the ability of that domain name to generate traffic (and ad revenue) during an initial registration period.  Most registrars offer a refund if a domain registration is cancelled during this initial period.  Cybersquatters are using this period to register thousands of domain names, test drive them, and return them if the profitability potential doesn’t justify the registration cost. 

Microsoft, like other trade-mark owners, is using all legal means available in the battle against online trade-mark infringement, including UDRP complaints, and lawsuits based on trade-mark infringement and the US Anti-Cybersquatting Consumer Protection Act .  In Canada, there is no corresponding statute, so trade-mark owners must decide between the Trade-marks Act and the CDRP .  Microsoft lost one battle under the CDRP involving a .CA domain name. The domain name msnsearch.ca was registered by Canadian company Microscience Corp.  Microsoft alleged the domain name was confusingly similar to its MSN family of trade-marks.  Microscience fought back.  In the decision the panel agreed that there was confusing similarity, Microsoft lost on the grounds that there was no “bad faith” on the part of Microscience since it was not a competitor of Microsoft and the registration did not prevent Microsoft from registering its own trade-marks as a domain name.

The lessons?  Cybersquatters move fast and trade-mark owners have to educate themselves on the legal tools available to play hardball in these domain name games.  The tools include arbitration under the applicable dispute resolution policy, and litigation using trade-mark laws in the country having jursidiction over the infringer. 

Calgary - 13:02 MST

In the holiday spirit, we can’t resist analyzing the intellectual property rights in the Grinch. How did a grouchy green cave-dweller become a multimillion dollar IP asset? 

Copyright

The original book “How the Grinch Stole Christmas” was written in 1957 by Theodor S. Geisel under the pseudonym Dr. Seuss. The copyright in the character and the related trade-marks is owned by Dr. Seuss Enterprises L.P., a California limited partnership created after the author’s death to handle licensing of the Dr. Seuss empire. The copyright in the original book is owned by the publisher, Random House Inc. 

An animated television special was created in 1966 by Metro-Goldwyn-Mayer, Inc., now part of the Time Warner empire; the copyright in the television production is now owned by Turner Entertainment Co.  The copyright in the music in the television production (based on the book) was originally owned by Metro-Goldwyn-Mayer, Inc. as employer for hire of Theodor S. Geisel and Albert Hague. RCA Records published a compilation of songs from the television production. 

In 2000, the movie rights were acquired by Universal and the copyright in the movie “Dr. Seuss’ How the Grinch Stole Christmas!”, directed by Ron Howard, is owned by Luni Productions, a Universal production company. A novelization of the movie (based on the original book) was written by Louise Gikow and copyright is owned by Universal Studios Licensing Inc.

Inevitably, someone decided that the story was fit for a musical production: “Dr. Seuss’ How the Grinch Stole Christmas! The Musical” opened in San Diego in 1998 and moved this year to Broadway.  The copyright in the musical (lyrics and music) is owned by Timothy Mason and Mel Marvin.

All under license of course.

Trade-marks 

The word GRINCH is a registered trade-mark of Dr. Seuss Enterprises L.P. in Canada.  In the US, the GRINCH trademark was registered by Dr. Seuss Enterprises LP in 2000 for T-shirts, shirts, tops, sweaters, hats, headwear, aprons, sweatshirts and any other merchandising category you could think of. Interestingly, an individual by the name of John Christopher Chlebowski, Jr. obtained the first trademark registration for the word GRINCH, claiming a date of first use in 1991 for “entertainment, namely, live performances by a musical band.”

Domain Names

The domain name grinched.com  is owned by Universal Studios for use with its movie-related website, under license from Dr. Seuss Enterprises.  The domain name howthegrinchstolechristmas.com is registered by an unknown registrant and currently resolves to a “domain for sale” site (which would make a good case for “bad faith” registration under the Uniform Dispute Resolution Policy arbitration procedure).

Patents

The Grinch is mentioned in several U.S. patent applications, although no-one has yet found a way to make the character himself the subject of a patent.  For example, United States Patent No. 6,982,780 (filed by inventors Steven Morley, et al.) which issued on January 3, 2006, claims patent rights in a method for creating a playlist for a digital cinema system.  The work “How the Grinch Stole Christmas” is mentioned in the claims description as an example of the use of the invention.

Licensing

Dr. Seuss Enterprises L.P. with Audrey Geisel at the helm, appears to control all trade-mark and copyright licensing of the original Grinch character and related paraphernalia as well as the entire Dr. Seuss line of products, and has licensing deals for countless spin-off products.  The movie licensing is handled by Universal Studios Licensing, Inc., which is itself originally under license from Dr. Seuss Enterprises L.P.   Although Dr. Seuss died in 1991, he has consistently made the Forbes list of top-earning deceased celebrities due to the marketing engine of Dr. Seuss Enterprises L.P. It generated $10 million last year.  For the movie version of the Grinch, the licensing company took 4 percent of the box-office gross, 50 percent of the merchandising revenue and music-related material, and 70 percent of the income from book tie-ins.  We haven’t even touched on the licensing for Universal’s theme-park.

Infringement

Alas, we have uncovered no Grinch lawsuits, although few literary characters would be more suitable as a plaintiff.  It seems to us that Mr. Chlebowski, armed with a trademark registration for the word GRINCH in association with “entertainment, namely, live performances by a musical band” would have a claim against the producers of the live musical version of the Grinch story, but we have seen no effort on the part of Mr. Chlebowski to pursue that action. Perhaps the prospect of shutting down a family Broadway musical during the Christmas season is a bit too unpalatable, even for a GRINCH trademark owner.

Calgary - 23:11 MST

The Canadian trade-mark RIDENT for golf clubs is confusingly similar to the US trade-mark TRIDENT for golf clubs.  That’s the easy part.  Now, how do you confine a Canadian company from selling its RIDENT brand golf clubs over the internet to US consumers who may be familiar with the rival TRIDENT brand?  We’ve got e-commerce, intellectual property rights and court orders.  Just the thing to take to the Supreme Court of Canada.

In Pro Swing Inc. v. Elta Golf Inc. 2006 SCC 52, the Supreme Court of Canada (SCC) tackled this problem on a number of levels.  Pro Swing, owner of the TRIDENT trade-mark in the US, initially obtained an order from a US court, stipulating that the Canadian company, Elta Golf, should cease sales of RIDENT brand golf clubs into the US.  But in practical terms, the court order was only enforceable in the US and Elta Golf was an Ontario-based company.  Pro Swing commenced a lawsuit in Canada to enforce its US judgement. 

Traditionally, foreign judgements can be enforced in Canada where they are a final order to pay a defined sum of money.  Or put another way, where compliance is relatively easy to enforce and monitor: either the money has been paid, or it hasn’t.  In the Pro Swing case, the US order was a “foreign non-monetary judgment”.  In other words, it carried with it a number of non-monetary orders and stipulations.  The SCC has now clarified that these types of orders can be enforced in Canada. Unfortunately, the court was split on when they should be enforced. Here are some of the factors the Canadian court will take into consideration:

●       are the terms of the foreign order clear enough?

●       is the foreign order sufficiently limited in scope?

●       is it a final order?

●       is enforcement of the order a justifiable use of Canadian judicial resources? 

In the end Pro Swing’s US judgement was not enforced by the court. The lessons for business?  First, foreign litigants seeking to enforce their foreign judgements in Canada now have a greater range of options available to them; they are not confined to monetary orders alone.  Secondly, because of the thicket of issues which a Canadian court will consider, it is wise for US counsel to seek advice from Canadian counsel prior to drawing up the terms of the US order to ensure it stands the greatest chance of enforcement in Canada.  Third, in practical terms, the world of e-commerce just got a little cozier: cross-border business and internet sales mean that Canadian and US companies will continue to come into conflict and this decision effectively shrinks the gap between foreign and Canadian courts.

Calgary - 09:59 MST