In a case involving three computer game makers, a UK Court of Appeal decision (Nova Productions Limited v. Mazooma Games Limited & Others [2007] EWCA Civ 219) has confirmed that the general ideas and structures underlying a computer game do not enjoy copyright protection.  The decision, handed down last week, confirms that as long as the source code and graphics are not copied, the ideas and structures may be copied without infringing copyright. 

The law is very similar in Canada. One of the leading cases analyzing the question of copyright infringement in software is Delrina Corporation v. Triolet Systems Inc., a 2002 Ontario Court of Appeal decision.  Generally, Canadian copyright law is clear that ideas and structures are not protectable by copyright.  To arrive at that conclusion however often requires an exhaustive analysis of the code and the underlying structures.  Courts will consider whether one work is a “substantial” copy of another.  In measuring what is “substantial” the court will disregard elements of the work that either have no originality, are dictated by functional considerations (such as underlying structures) or are otherwise not protectable by copyright (such as ideas).

Calgary - 10:32 MST

On Friday a proposed Federal surveillance law (Bill C-416) was introduced in Parliament. The bill is designed to require ISPs and other telecommunications service providers to establish and maintain surveillance capabilities to permit interception of online communications. The proposed law also requires ISPs to “provide basic information about their subscribers to the Royal Canadian Mounted Police, the Canadian Security Intelligence Service” and provincial police services.

Calgary - 20:44 MST

In a decision released last week, the domain name yellowpage.ca walked away from a challenge mounted by the Yellow Pages Group Co.

In Yellow Pages Group Co. v. Coolfred Co.  (March 13, 2007), the three-member panel reviewed a complaint by the owners of the famous YELLOW PAGES family of trade-marks.  In its complaint, the trade-mark owner alleged that an Ontario registrant registered the domain name yellowpage.ca in violation of the dispute resolution policy.  To succeed, the complainant had to establish three things:

• that the domain name is identical or confusingly similar to the complainant’s trade-mark;
• that the registrant has no legitimate interest in the disputed domain name; and
• that the domain name was registered in “bad faith”.

The trade-mark owner was able to meet the first two tests but failed on the third. Despite creative arguments to paint the registrant as a career cybersquatter, the complainant failed to convince the panel that the domain name was registered in bad faith.  The complaint was dismissed and the registrant held on to the domain name. 

One other point is worth noting: Under paragraph 4.6 of the CDRP, a $5,000 penalty may be imposed on unsuccessful complainants who are engaged in reverse hijacking of domain names.  In this case, the registrant countered with its own claim that Yellow Pages Group should be obliged to pay out the $5,000 to defray the registrant’s costs.  Such a counter-claim can only succeed where the complainant mounted its challenge “unfairly and without colour of right”.  The panel correctly denied this relief, but it serves as a useful reminder of the potential costs of failed complaints.

Calgary - 12:35 MST

A Nevada federal court has decided that the mere operation of a website accessible to Nevada users is, by itself, not enough for a Nevada court to assert jurisdiction over the operators of the site.  This case, Mullally v. Jones, Civil No. 06-14867, 2007 WL 628367, dealt with a website operator based in the UK who tried to avoid the jurisdiction of the Nevada court.  If the same analysis is applied, the reasoning should also hold true for a website operator based in Canada.  The Nevada court applied the Ninth Circuit’s analysis from the 1997 case Cybersell v. Cybersell in reviewing the nature of the site and the contacts between the site and the state in question.  In Mullally v. Jones the website operator did not have any other contacts with Nevada and did not purposefully direct business to Nevada residents.

Calgary - 10:45 MST 

Digital music has come a long way since the revolutionary CD was first introduced in 1983. Now a computer company - Apple Inc. - dominates the music market and the Copyright Board of Canada has just decided that 7.9 cents on every 99-cent iTunes download must make its way back to the copyright collective.

The Board issued its decision on Friday on the tariff covering online music in Canada. The Board ruled that in the case of permanent downloads, 7.9% of the price of a song must be paid back to copyright holders as a royalty. For subscription-based downloads, the tariff is 5.9% of the cost of a month’s subscription, and for on-demand streaming music, the rate is 4.6% of the monthly subscription cost. This brings to an end several years of debate on the tariff and represents a compromise between the music stores and representatives of copyright holders.

Calgary - 21:00 MST

The owner of the trade-mark CHEAP TICKETS has struck out in Canadian Federal Court in a decision handed down on March 2, 2007. This is the second blow, coming after the owner’s loss in a 2003 domain name arbitration decision.  

In Emall.ca Inc. v. Cheap Tickets and Travel Inc. (2007 FC 243), the court dealt with a challenge brought by Emall that the trade-mark CHEAP TICKETS, owned by Cheap Tickets and Travel Inc., was too descriptive or generic to function as a valid trade-mark.  Trade-mark law insists that a trade-mark must be distinctive of the products or services of the trade-mark owner.  Where the trade-mark is descriptive of the products or services themselves or is so generic that it fails to distinguish the owner’s products or services, it can’t function as a trade-mark (just like SHREDDED WHEAT can’t be used as a trade-mark for shredded wheat cereal).  The court agreed with Emall’s challenge and concluded that the trade-marks should never have been registered in the first place.  The registered trade-marks were ordered struck from the register.

In 2003, Cheap Tickets and Travel Inc. launched an unsuccessful CDRP challenge to Emall’s registration of the cheaptickets.ca domain name.  Emall’s lawyers defended, claiming that the trade-mark was generic and that the complaint constituted an attempt to hijack the domain name.  In the arbitration decision, the panel agreed with Emall and dismissed the complaint since the domain name was registered before the Complainant had any rights to the CHEAP TICKETS trade-mark. 

Calgary - 14:35 MST

What is the scope of intellectual property protection for two- and three-dimensional articles or images? 

A recent US case (Eliya Inc. v. Kohl’s Department Stores, S.D.N.Y., No. 06 Civ 195 (S.D.N.Y. Sept. 13, 2006)) determined that making a three-dimensional object (in this case, a designer shoe), based on a two-dimensional image of that object, did not constitute copyright infringement.  This was the case despite the registration of the two-dimensional image under the Copyright Act.  The court concluded that the scope of protection under copyright law only extended to the reproduction of the 2-D image or drawing of the shoe, not the creation of a functional 3-D shoe which was copied from the 2-D image.  However, the plaintiff also claimed trade dress infringement under the US Lanham Act, and this claim survived.

In another recent US decision (Meshwerks Inc. v. Toyota Motor Sales U.S.A. Inc., D. Utah, No. 2:06 CV 97), the court decided that animated three-dimensional digital images of car designs did not enjoy copyright protection since they lacked the creative spark required for copyright to apply.  In this case Meshwerks was hired by Toyota to create the 3-D digital replicas of cars for use in advertisements.  Meshwerks went so far as to register copyright in their 3-D images and then they turned around and sued Toyota for copyright infringement.  The court denied that the images enjoyed copyright protection since they were merely “product-accurate representation without the introduction of new creative elements.”

In Canada, Pyrrha Design Inc. v. 623735 Saskatchewan Ltd., 2004 FC 423, (2004), 30 C.P.R. (4th) 310 dealt with a claim for infringement based on the defendant’s copying of certain jewellery designs.  The plaintiff sued under copyright.  The defendant argued that the Copyright Act didn’t apply since, because of the exceptions and stipulations under Section 64 of the Act, the jewellery designs were covered by the Industrial Design Act, not the Copyright Act.  The court agreed and since the lawsuit was founded solely on copyright infringement, the claim was dismissed.

The lessons for business?  Several things come to mind:

(1) There may be concurrent protection under both copyright and industrial design.  Determine where you can get the best protection and, if necessary, obtain a registration.  To obtain an industrial design registration, certain conditions need to be satisfied, so ensure that you have reviewed your options in advance.

(2) Where you are entering into an agreement (like the one between Meshwerks and Toyota), ensure that ownership of copyright in the resulting images or designs is clearly dealt with.  Even though Toyota won the case, the lawsuit might have been avoided altogether if the agreement was clear on copyright ownership.

Calgary - 14:28 MST

Proposed legislation has been introduced to focus specifically on the protection of Olympic trade-marks.  The Olympic and Paralympic Marks Act (Bill C-47), introduced last week, will attempt to prevent unauthorized use of the Olympic trade-marks by anyone other than corporate licensees who have paid handsomely for the privilege of associating themselves with the 2010 Games.  Oops, I just used two protected words which appear in the Bill, along with Winter, Gold, Silver, Bronze, Medals and Canada’s Games.  In my earlier post, I queried why such legislation was required in light of the extraordinary protection already provided under Section 9 of the Trade-marks Act.  Other commentators have also expressed concern over this special-interest legislation. If passed, the law will grandfather all potentially infringing uses which were in use prior to March 2nd.  Enforcement will be interesting to watch. 

 Calgary - 15:06 MST   

On Jan. 9, 2007, the US Supreme Court handed down its decision in MedImmune, Inc. v. Genentech, Inc. resulting in a significant change to the licensing landscape.  In this case, MedImmune had entered into a licensing agreement with Genentech under which MedImmune was to pay royalties for the use of Genentech’s “Cabilly I” patent and (when it issued) the “Cabilly II” patent.  When the second patent issued, Genentech sent a letter requiring the payment of royalties for the use of the second patent.  MedImmune paid under protest, then turned around and sued the licensor on the basis that the second patent was not valid or enforceable.  By continuing to make the payments, MedImmune kept the license alive.

The essential question in the case was whether a patent licensee was obliged to withhold its royalty payments and therefore commit a material breach of the license agreement before it had grounds to sue to declare the patent invalid?  Prior case law said that a licensee did have to effectively breach the agreement before it had standing to sue.  This decision overturns that line of cases and permits a licensee to challege the validity of the patent in court, while still making payments as a licensee and keeping the license.  For MedImmune, breaching and terminating the license would have effectively shut down its own business.

For patent licensors, there are two practical points to remember:

1.  Watch how you word your letters to licensees when politely requesting (or aggressively demanding) royalty payments, as such letters can be construed as a threat of litigation, providing grounds for a declaratory suit by the licensee;

2.  Consider reviewing language in the patent license to see if licensees can be forced to waive any right to challenge the validity of the licensed patent.

The fallout from this decision will be watched closely by both patent holders and their licensees.

Calgary - 12:32 MST