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ONLINE: ONTARIO SUPERIOR COURT DECISION DOES NOT MEAN YOU CAN SAY WHATEVER YOU WANT WITH IMPUNITY

The Ontario Superior Court recently decided that a blog comment must pass a higher threshold before it’s considered defamatory than statements made in other places.

Defamation is the communication to third parties of a false statement that tends to injure the reputation of an individual. Slander is oral defamation. Libel is written defamation.

The reasoning in the case of Baglow v. Smith includes the thought that an ongoing blogging thread is akin to a debate. The person who felt wronged by a comment has an opportunity to reply to set the record straight and lessen the impact on his reputation of the original statement.

That makes sense if the two parties were already both involved in the online banter. But might be less applicable if the aggrieved party had not been involved in the debate prior to the comment.

Another thought was that given the nature of the online forum, readers would be less likely to interpret comments such as in this case — which suggested the person was a Taliban supporter — as being intended to be factual.

It probably didn’t help the complainant’s case that he had made some derogatory comments of his own in the comment thread. To determine if a statement is defamatory, it must be looked at in the context of the conversation or publication as a whole, and not as an isolated statement.

But this decision doesn’t mean the Internet is a defamation- free zone and that one can say whatever one wants with impunity. It just means the analysis as to whether particular comments on the Internet amount to defamation considers the nature of the medium. That makes sense, as defamation is about what the public thinks as a result of the comment.

Earlier defamation decisions about material posted on the Internet have awarded higher damage awards than if it had been published on paper. The rationale is there is a broader distribution of the comment.

So we could be in the position where a defamatory comment in an article on the Internet or in a blog post or on some form of social media might have a risk of a higher damage award — but the threshold for being considered defamatory in the first place is higher. In other words, more potential damages, but less risk of being found defamatory in the first place.

And the risk of a comment being considered defamatory might be less if discussion ensues, especially if the aggrieved party is involved in the discussions.

The bottom line — if someone makes a comment online about you that you think might affect your reputation, you should think carefully about what to do about it.

On the one hand, it might not attract enough attention to do any real harm, and the wrong reaction might just bring more attention to it. On the other hand, its online nature gives the opportunity for a measured, rational reply to set the record straight.

Whether a domain name (such as www.harrisonpensa.com) is property that one owns — or just “a bundle of rights” — has been the subject of legal debate. The Ontario Court of Appeal recently said it is property.

The domain-name-as-property position makes sense in a world where, for example, in the early 2000s, wallstreet.com sold for more than $1 million and wine.com for more than $3 million.

Domain names are registered on a first-come, first-serve basis. The individual or company that registers the name receives the exclusive right to use the name, for which it pays a fee of a few dollars per year.

Registrars accredited by the Internet Corporation for Assigned Names and Numbers act as overlord, allowing domain registrants to use the domain name subject to any restrictions they may impose.

If a domain name is a licence, clauses may be included in a service agreement that might, for example, impose restrictions on assignment. If a domain name is property, such restrictions may be hard to uphold. If a domain name is property, a registrant will have rights relating to the domain name which include the right to use, convey, develop, exclude, bequeath, profit from, assign and dispose of, with or without consideration.

A licence is a special permission to do something on, or with somebody else’s property which, were it not for the licence, could be legally prevented or give rise to legal action.

Conversely, property is the right to control how and by whom a particular thing may be used. If a domain name is a licence, registrants are at the mercy of the registrar to determine how the domain name will be used. If a domain name is property, the registrants are free to use the domain name in any manner they like and cannot be legally prevented from doing so by the registrar.

In the recent Ontario Court of Appeal decision, Tucows.Com Co v. Lojas Renner S.A. (2009), the court settled the licence/property debate, at least in Ontario.

Tucows.Com Co. (“Tucows”) is the registrant of more than 30,000 domain names. Lojas Renner (“Renner”) is a Brazilian subsidiary of JC Penny and has registered the trademark Renner in Brazil and other states. Renner made a complaint to the Internet Corporation for Assigned Names and Numbers regarding Tucows’ registration of the domain name “Renner.” In response, Tucows initiated its own action in Ontario for ownership of the domain name.

The Ontario Court of Appeal examined the traditional common-law attributes of property, specifically whether there exists “a collection of rights over things that can be enforced against others.” The court found the rights associated with a domain name include those rights.

As a result, the Ontario Court of Appeal found the domain name, as a business asset of Tucows, was intangible property.

This decision won’t have dramatic impact on the day-to-day use of domain names, but helps clarify their legal status for many issues ranging from ownership disputes to the right to bequeath them to heirs.

You have designed the perfect logo for your business. Before investing more time and money in using and promoting your new logo, you want to make sure you have the right to use this trademark for a long time and you’re not infringing someone else’s existing trademark.

You start by doing a search of existing registered trademarks in the database of trademark registrations on the Canadian Intellectual Property Office (CIPO) website.

The search doesn’t turn up any similar marks relating to the wares and services you provide, so you file a trademark application. A few months later a CIPO examiner approves your application. CIPO then publishes your application in the Trademarks Journal to allow the public an opportunity to oppose it.

Two months pass without a challenge to your application and the trademark is successfully registered.

You are now the first person to register that trademark in Canada for your wares and services. You now have exclusive Canada-wide rights to use this logo for the next 15 years. Or do you?

In a recent decision from the Supreme Court of Canada, the registered trademarks of a retirement company in Ottawa were invalidated because of the likelihood of confusion with similar unregistered trademarks of a company in Calgary that had used them before the Ottawa company.

The Trademarks Act prohibits the registration of a trademark that is confusing with a trademark previously used in Canada, regardless of whether that trademark has been registered.

However, some people thought the test for confusion took into account the geographic region of the operations associated with the trademark. For example, if a Calgary-based retirement residence did not operate in Ontario, its trademarks would not be considered confusing with trademarks of a retirement residence in Ottawa.

The Supreme Court in Masterpiece v Alvida determined the Trademarks Act affords Canada-wide rights even if a trademark is only used locally.

The test is based on the assumption both trademarks under consideration are used in the same area. It was irrelevant the operations of the companies were in different provinces.

The companies had similar trademarks in the same industry, so the trademarks were deemed confusing. Since the unregistered trademark was used prior to registration and use of the registered mark, the registration was expunged.

This demonstrates importance of conducting searches for unregistered trademarks before filing a trademark application. It may be difficult to locate every potentially confusing unregistered trademark throughout Canada, but search services are available that perform reasonably comprehensive searches.

The case also demonstrates the usefulness of registering trademarks as early as possible. In this case, if the Calgary company had registered its marks when it first used them, it would have prevented the Ottawa company from registering its mark, thus avoiding a costly and time-consuming court battle.

The Supreme Court of Canada recently released its decision in the case of Masterpiece v Alvida which clarified some trade-mark issues, particularly on the issue of confusion.

Here are some notes from an IT-Can roundtable conference call from today that discussed the case. Presenters were Kelly Gill of Gowling, Lafleur Henderson LLP, Clarke Hunter of Macleod Dixon LLP and Brandon Potter of Macleod Dixon LLP.

The issue in the case essentially related to the use by different parties of “Masterpiece Living” vs “Masterpiece the Art of Living”, and whether they are confusing.

The main issues:

Is it relevant that the companies are in different provinces?

Is the “get up” or appearance of a word mark relevant?

Is it relevant that the wares are costly?

The case reinforced some existing trade-mark understanding – but also clarified some things.

A registration gives national rights – and you must assume for the confusion analysis that they are used in the same place. The fact that they are actually provided in different provinces is irrelevant.

When dealing with a registered mark – one doesn’t look at how the mark is actually used – one looks at the actual registration. So if one has registered a word-mark – the fact that the word-mark is used in practice in a certain font or design is irrelevant.

These marks were for retirement homes, which is an expensive and not a quick decision. The court said that it is a first impression test, not after research. The price of the goods is a factor, but not as definitive as some had thought.

The court cast some doubt on whether expert or survey evidence was necessary, and encouraged litigants to rely on judge’s decisions without them.

From the perspective of the trade-mark registration process, the case reinforces some things:

It’s a good idea to search across Canada – preferably using a dedicated trade-mark clearance service that looks at common law uses across Canada.

It’s best to register sooner rather than later, as once filed it acts as a barrier to future applicants of confusing marks. (Rights always go to first use – but first application gives a procedural and cost advantage.)

Consider a trade-mark watch service that monitors the trade-marks journal for similar applications, so it can be opposed then, rather than finding out later and having to litigate it. It is simpler and cheaper.

If dealing with expensive wares and services – it does suggest one gets broader protection. This balances off against the former notion that the time to research after seeing a mark and acting on a purchase is relevant.

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There is a common-law rule that illegally obtained evidence is admissible in court no matter how it was obtained. But there are exceptions.

Given the digitally interconnected world we live in, it is not surprising there are cases where evidence has been obtained by way of an unauthorized computer access, or hacking.

Hacking is an indictable offence under the Canadian Criminal Code with a maximum 10 years imprisonment. The code defines hacking as any unauthorized use of a computer to:

• obtain a computer service (which includes retrieval of data), 
• intercept any function of a computer system,
•  destroy, alter or render data meaningless, and
•  obstruct, interrupt or interfere with the lawful use of data.

Based on the common-law rule, one would think information illegally obtained via unauthorized computer access should be admissible in civil proceedings. However, when it comes to hacked information, application of the common-law rule is not always so clear-cut.

In Autosurvey Inc. v. Prevost, a company concerned that part of its system had been compromised by a former employee hacked into the former employee’s own private server and copied everything on it to preserve potential evidence.

The information copied contained, among other things, privileged solicitor-client communications, litigation strategy notes and confidential client information (credit card numbers and passwords) from the employee’s other legitimate business interests.

The company’s lawsuit against the employee was ultimately stayed by the court. The court called the company’s “brute force entry” into the former employee’s server egregious. In justifying his stiff decision, the judge said the company’s “failure to fully disclose these serious procedural violations to the defendants and the court on any sort of timely basis, and the unquestionable prejudice that will result to the defendants as a consequence, demand public denunciation and the levy of a severe sanction by the court.”

In Osiris Inc. v. 1444707 Ontario Ltd., an employee of the defendants hacked into his employer’s server and took more than 2,000 documents in an effort to protect himself after refusing to participate in unethical conduct with his employer. The employee in turn provided one of the plaintiffs with 31 of the documents relevant to the litigation and damaging to the defendants.

Unlike in Autosurvey, the documents in question were not privileged and would have been producible under ordinary circumstances.

Ultimately, the 31 documents were allowed to be relied on pending a ruling on their authenticity.

These cases highlight that, despite the common-law rule regarding illegally obtained evidence, information obtained by unauthorized computer access will not always be admissible.

At the very least, the acquired information must be evidence and cannot be something that would not be allowed traditionally such as confidential communications unrelated to the matter at issue. Parties cannot conduct fishing expeditions into opponent’s electronic servers, and the courts will punish individuals for such egregious invasions of privacy. And legal counsel cannot have anything to do with the hacking, or advise their clients to do so.

Various Canadian Privacy Commissioners have taken the position that car license plate numbers are personal information, and thus subject to privacy legislation. That comes up, for example, in the context of Google street views, where Google has been told they must blur license plate numbers.

Various Privacy Commissioner decisions have also limited the use of driver’s license information. For example, a store may ask to see a driver’s license as identification for someone returning a purchase as a fraud prevention measure, but the store is only supposed to look at it, not record the information on it.

Those principles are now in question as a result of an Alberta Court of Appeal Decision. (Or at least as far as Alberta privacy legislation is concerned.)

In Leon’s Furniture v Alberta the Court of Appeal said that license plate numbers are not personal information. And that a business can record driver’s license numbers so long as there is a reasonable need, and appropriate safeguards are in place.

Given the impact of this decision it would not be surprising if it was appealed. The decision contains a dissent that Privacy Commissioners will no doubt find encouraging.

For more commentary and analysis about the case see All About Information and the Canadian Privacy Law Blog. The decision is here.

The Ontario Court of Appeal in its decision in R v Cole talks about an employee’s expectation of privacy on a work computer.  For more detail see commentary by David Fraser and Dan Michaluk.   This decision was very fact driven, and found that there was an expectation of privacy for a work laptop for which the employee had permission to use for personal work, and to take home.  It tempered that expectation by an implied right of access by IT personnel to service and maintain the network.  And explicit company policies can counter that expectation.

So if your business does not have a technology use policy that addreses this issue, you should consider implementing one.

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PIPEDA: Law requires a high degree of accuracy when collecting personal information

The recent Federal Court of Canada decision in Nammo v. Transunion marks the first time damages have been awarded under the Personal Information Protection and Electronic Documents Act.

Mr. Nammo, the self-represented applicant, was awarded $5,000 in damages after the credit bureau disclosed inaccurate personal information to a bank in connection with his loan application, which was declined as a result. This decision is a departure from previous cases, which have refused to award PIPEDA damages.

For example, Randall v. Nubodys Fitness Centres was based on the facts that there was no injury to the applicant sufficient to justify an award of damages, the respondent did not benefit commercially from the breach, the respondent did not act in bad faith and there was no link between the disclosure and the employer’s alleged retaliation against the applicant.

The court determined the violation of the applicant’s rights under PIPEDA was “the result of an unfortunate misunderstanding,” and an award of damages should only be made “in the most egregious situations.”

The court in Nammo stated the violation of Mr. Nammo’s rights was not “the result of an unfortunate misunderstanding.” The court noted that PIPEDA requires personal information to be as accurate, complete and up-to-date “as is necessary for the purposes for which it is to be used.”

In this case, the breach involved financial information of high personal and professional importance, and therefore required a high standard of accuracy and completeness.

The court held the credit bureau’s conduct rose to the level of an egregious situation. The decision was based on the facts that the disclosure of inaccurate information was directly linked to the refusal of the loan and injury to Mr. Nammo, that the credit bureau profited from the disclosure, that the credit bureau failed to rectify the problem in a timely manner and that the credit bureau acted in bad faith in failing to take responsibility.

The court awarded $5,000 in damages for the humiliation he suffered as a result of having his loan application denied and the further humiliation and inconvenience from the delay before the error was properly corrected. It will be interesting to see whether this case opens a floodgate of litigants seeking damages under PIPEDA.

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When advertising your product on the Internet, using the name of a competitor can sometimes increase awareness of your own product. It’s even legal.

Recent decisions from British Columbia and Quebec have held that “keyword advertising” using the trademark or name of a competitor is a legal advertising practice. These decisions follow a similar trend in other jurisdictions.

Keyword advertising is a form of online advertising linked to specific words or phrases. Advertisers pay search engines, such as Google, for links to their websites to appear as “sponsored links” alongside the search engine’s normal search results.

The advertiser creates an ad which specifies certain keywords, then sets a maximum price they are willing to pay to use them. When a user searches using one of the keywords, the search engine checks to see which ad is most relevant and has placed the highest bid for the keyword.

These ads are then displayed as “sponsored links” on the search results.

If the user clicks on a sponsored link, the advertiser is charged according to its bid.

Advertisers sometimes specify trademarks or names of competitors as keywords. Such ads can sometimes outrank the ad of the competitor.

In Private Career Training Institutions Agency versus Vancouver Career College (Burnaby) Inc., the Agency sought an injunction against VCC to stop it from using competitors’ business names in its keyword advertising.

The Agency got complaints from member institutions. Students searching for other institutions clicked on sponsored ads for VCC, thinking the ads were for the college for which they were searching. Some even enrolled at VCC before realizing it was not the institution they had intended on attending.

The agency alleged that VCC’s use of keyword advertising was false, deceptive or misleading advertising designed to lead students seeking information about another institution towards its own.

The court refused to grant an injunction, finding that using keyword advertising was no different than the traditional marketing practice of locating an advertisement close to a competitor’s.

VCC’s actions were not found to have deceived consumers. Rather, the actions of individual consumers who clicked on the sponsored ads, or even enrolled at the schools, resulted from their own imprudence. VCC did not hold itself out to be anything other than it was.

The Quebec Superior Court dealt with a similar situation involving a chocolate company, Humeur Groupe, which purchased keywords of competitors for advertising on Google. In this case, Humeur specifically stated in its ads that it was an alternative to its competitor, Chocolate Lamontagne.

Despite the fact that Chocolate Lamontagne attributed a loss in sales of $112,000 to Humeur’s ad campaign, the court refused to grant an injunction. Information providing an alternative to a particular business cannot be prohibited. Rather, competition must take into account new ways of interfacing with consumers. The court referred again to the fact that individual consumers are freely choosing to access the alternative site.

It remains to be seen whether keyword advertising is contrary to the Trademarks Act, as the issue was not argued in either case.

The court held that is was acceptable.  The case is not as helpful as it might be for precedent value though, as it hinged on specific Alberta regulations, and the reasons for judgment were split.  Some of the judges felt there was no reasonable expectation of privacy – while some felt there was, but that the regulation overrode that expectation.

For more detail, see commentary by David Fraser, Brian Bowman, and on the Canadian Technology & IP Law blog.