For the London Free Press – November 22, 2010

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Traditionally, they have been reserved for inventions that are tangible

The recent Federal Court of Canada decision in Amazon.com Inc v. the Attorney General of Canada held that a “business method” can be patented in Canada.

This essentially allows an idea, without an actual physical manifestation, to be patented if the right tests are met. The Federal Court in Amazon overturned the previous ruling by the Commissioner of Patents that rejected Amazon’s efforts to patent a business method.

Patents have been traditionally granted for tangible inventions. In other words, they can be held in your hand or touched. Business methods are an intangible process.

“Business method” patents (BMPs) are a class of patents covering new methods of conducting business. For example, in the Amazon decision, Amazon sought to patent single-click online ordering as a proprietary invention.

“One-click ordering” allows users to make online purchases with a single click of the mouse, the payment information having already being entered by the user. The result is that users do not need to enter billing and shipping information every time a purchase is made; the information is entered once and future purchases require only one click to complete the check-out.

Amazon obtained a U.S. patent for the 1-click method years ago.

According to patent agent Natalie Raffoul, the reasoning and final decision in Amazon follow closely that of the leading U.S. case, re Bilski. Ms. Raffoul pointed out similar to Amazon, the U.S. Supreme Court in re Bilski decided an abstract idea is not patentable; so the business method in question must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing.

Business method patents have been controversial in both Canada and the U.S. They aren’t typical in that they do not attach to a tangible item but instead to a more abstract idea or process. Detractors have used this to support the claim that they should not be allowable under patent law. Critics have also voiced concern about the implications to start-up businesses.

In Amazon, Justice Phelan held the appropriate test to identify a business method patent is the test set out in the Progressive Games Inc. v. Canada (Commissioner of Patents) decision: 1) there must be a practical application; 2) it must be a method of applying skill and knowledge and; 3) it must have a commercially useful result.

Justice Phelan decided Amazon’s single-click ordering met these criteria and was a tangible new business method, not simply a scheme or abstract idea, which was put into action through the use of cookies, computers, the Internet and the customer’s own action.

The Amazon decision signals a divergence from the old process in Canada as it is the first case to recognize business method patents are patentable. The case bears watching because the decision has been appealed and could be overturned.

That’s the title of my Slaw post for today.  It reads as follows.

Those who practice in the IT area have a lot of potential new law to digest.  The Federal government has several bills in various stages that will affect many businesses and organizations, and all of us as consumers.  These bills have been mentioned on Slaw, but I thought it was worthwhile listing them all in one place. 

Bill C-28    Fighting Internet and Wireless Spam Act.  

This bill brings in several anti-spam measures.  While this is welcome by most people, the language has the possibility to affect how typical businesses communicate.  Things that we may not consider to be spam might get caught by the act.  Since the penalties are significant, we will have to take a close look at this before it is in force to understand what it means for a typical business or organization. 

Bill C-29     An Act to amend the Personal Information Protection and Electronic Documents Act

This would make several amendments to PIPEDA.  Most of the amendments were expected, and are welcome as they address issues that have arisen from the current legislation.  There are a couple of new parts that could use some clarity, though.  Language that attempts to clarify what “lawful authority” is that allows one to release information to law enforcement doesn’t really seem to clarify what the threshold of proof is, or what to ask for.  It also contains language that requires notification of breaches in certain circumstances to both the privacy commissioner and the affected individuals.  The language has threshold tests – which on the surface are not as clear as they might be.   If this language stays, it may take a privacy commissioner decision and/or court decision to clarify the threshold.  The best source for more information is David Fraser’s blog

Bill C-32     Copyright Modernization Act.

This is the latest of several attempts over the years to amend the Copyright Act.  Controversial elements include digital lock provisions that will allow publishers to trump user rights.  There has been a lot written about this, including a book entitled From “Radical Extremism” to “Balanced Copyright”: Canadian Copyright and the Digital Agenda written by several copyright experts. The best source for more information about the bill is Michael Geist’s blog.

Bill C-51     An Act to amend the Criminal Code, the Competition Act and the Mutual Legal Assistance in Criminal Matters Act aka Investigative Powers for the 21st Century Act. 

There also appears to be at least one companion bill, C-52.  This is the latest incarnation of what has been dubbed a “lawful access” bill.   The bill essentially tries to give law enforcement more access to electronic communications.    Critics refer to the bills as “awful access”, and point to the erosion of privacy and the costs ISP’s will need to spend.  They also question the practical effectiveness of the measures.   This bill is hot off the press, and I have not had time to look at it – but in general I fall into the ”awful access” camp.  Expect more commentary on this from both Michael and David.

ipblog.ca has a good post entitled The Perils of Co-ownership of Intellectual Property that refers to a case where a trade-mark application was held invalid.  The reason – it was registered by one entity in its own name, when it was actually owned jointly by 2 parties.

We get upset when governments outside of North America insist on being able to monitor internet based communications.   But we shouldn’t get too smug about it, as the same thing happens in North America.  See these posts that talk about a new attempt to legislate backdoor internet access in the US, why its a problem, and links to other commentary.  CircleID       Techdirt

The three strikes concept just won’t go away either.  Basically it allows or requires sites or internet access to be shut down based on unproven allegations they are used for infringement.  A new proposed US bill would do that.  See the CircleID link above for their take on that.

Mike Masnick of Techdirt puts that bill in perspective by saying that the same logic used by the proponents of the bill would have in the past banned Hollywood itself, the recording industry, radio, the DVR, and other ubiquitous things.

UPDATE: Also see the EFF take on the backdoor bill.

One of the most controversial aspects of the copyright reform bill is the digital lock provisions, which make it unlawful to break digital locks, even if it is only to exercise a right copyright law actually gives you.

A new US case has limited the effect of the US DMCA digital lock provisions, saying that they don’t prevent one from braking a digital lock to view or use a work.   As Michael Geist points out, that makes the Canadian proposal much tougher than the existing US provisions.

There has been a lot of controversy and debate over whether too many things are patentable, especially in the software and business method areas. 

Many thought the Amazon 1-click patent, which was under review, should not be valid.  The USPTO has, however, confirmed the patent.

Mike Masnick of Techdirt sums it up nicely, with links to further detail.  Mike says:

US Patent Office Decides That One Click Really Is Patentable

from the wow dept

Ladies and gentlemen, we now have confirmation that the USPTO is a joke. After years of back and forth, it has decided, once again, that Amazon’s one-click patent is perfectly valid. This, despite tons of prior art, and basic common sense. We were just wondering what was taking so long for the USPTO to reject the patent. But, of course, it seemed like the USPTO was willing to go out of its way to help keep this patent around. Of course, as some are pointing out, the end result of this patent surviving is that it may be used as example number one for patent reform.

For the London Free Press – March 8, 2010

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U.S. courts may have to decide if a teen’s parody of a popular clothing line is an infringement

The North Face Apparel Co., more commonly known as The North Face, recently filed suit against Jimmy Winkelmann, a 19-year old high school student and his small Missouri clothing company called The South Butt.

North Face’s statement of claim alleges trademark infringement and dilution, among other claims.

North Face sells athletic apparel and gear for runners, rock climbers, snowboarders and others. South Butt sells jackets, T-shirts and other apparel “approved for relaxation purposes only.”

Winkelmann says his intent was not to rip off the North Face, but to offer consumers an alternative.

He came up with the South Butt idea to mock North Face fleece jackets worn by the popular crowd at his school.

In response to North Face’s tagline, “Never stop exploring”, South Butt adopted “Never stop relaxing.”

The North Face’s legal counsel sent Winkelmann a cease and desist letter in August 2009, requesting that he stop using the South Butt name and logo and halt all sales, production and promotion of South Butt products.

According to North Face, the two logos are so similar as to possibly cause “consumer confusion as to the source, sponsorship or affiliation of particular promotions and services that could dilute or tarnish the distinctive quality of the famous and distinctive marks.”

Winkelmann recently filed a trademark application for the South Butt, which the North Face legal counsel also asked him to withdraw.

In response, Winkelmann’s counsel — a friend of Winkelmann’s father, who apparently agreed to represent the teen in exchange for a good bottle of red wine — filed a somewhat irreverent defence.

Mr. Watson, Winkelmann’s legal counsel, stated “the sense of parody employed by Winkelmann within the context of his South Butt undertakings clearly demonstrate a respectful, if not faltering ‘anti-North Face’ posture designed in all respects to distinguish itself from any and all North Face products.”

The defence points out that, to emphasize its position that the marks are unlikely to confuse, the defendant added this to its website: “We are not in any fashion related to nor do we want to be confused with the North Face Apparel Corp. or its products sold under ‘the North Face’ brand. If you are unable to discern the difference between a face and a butt, we encourage you to buy North Face products.”

Unless it is settled, the case will ultimately be decided on the technicalities of U.S. trademark law.

Since one legal tests of trademark infringement is customer confusion, you be the judge: Are the marks confusing enough that customers might think products bearing them are from the same source?

Mike Masnick of Techdirt has published a post that is a chapter he wrote for a book being presented at a conference for the International Association of Entertainment Lawyers (IAEL).

Its worth a read, not only for Mike’s thoughts on new ways for the music industry to make money, but also to consider how that business model might work for other industries. 

Here are some snippets to get a flavour:

It’s no secret that there’s a lot of concern these days about what the music industry will look like going forward — especially from those who work on the label side of the business and have been around for a bit. A variety of things have caused rapid change in the market. Competition from other forms of entertainment, such as the internet, movies and video games, have put more pressure on the industry, as consumers have been presented with significantly more options for their entertainment attention and dollars. And, of course, there’s the ever-present specter of unauthorized file sharing — or, as the industry prefers to call it (accurately or not), “piracy.”

…

However, there is another solution: stop worrying and learn to embrace the business models that are already helping musicians make plenty of money and use file sharing to their advantage, even in the absence of licensing or copyright enforcement.

In simplest terms, the model can be defined as:

Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model

Sound simple? It is, if you understand the basics — and it can be incredibly lucrative. The problem, of course, is that very few seem to fully understand how this model works. However, let’s go through some examples.

…

This is a business model that’s working now and it will work better and better in the future as more people understand the mechanisms and improve on them. Worrying about new copyright laws or new licensing schemes or new DRM or new lawsuits or new ways to shut down file sharing is counterproductive, unnecessary and dangerous. Focusing on what’s working and encouraging more of that is the way to go. It’s a model that works for musicians, works for enablers and works for fans. It is the future and we should be thrilled with what it’s producing.

For the  London Free Press – January 18, 2010

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Rival service Plurk alleges Microsoft copied as much as 80% of the code used in running the Juku program without permission

Microsoft recently susp-ended its new microblogging site, Juku, after it became clear the site contained code taken without permission from rival startup Plurk, a free social networking and microblogging service based in Canada.

Plurk recently alleged Microsoft copied as much as 80% of the code used in running the Juku program without permission. After investigating, Microsoft confirmed some Juku code had been used without permission and apologized to Plurk.

Though Microsoft admitted the plagiarism, it claimed a Chinese vendor developing the Juku application for MSN China was responsible for copying the code without permission.

“When we hire an outside company to do development work, our practice is to include strong language in our contract that clearly states the company must provide work that does not infringe the intellectual property rights of others . . . we are obviously very disappointed, but we assume responsibility for the situation. We apologize to Plurk and we will be reaching out to them directly to explain what happened and the steps we have taken to resolve the situation,” Microsoft said in a statement.

In response, Plurk co-founder Alvin Woon said, “we are still thinking of pursuing the full extent of our legal options available due the seriousness of the situation . . . basically, Microsoft accepts responsibility, but they do not offer accountability.”

“This event wasn’t just a simple matter of merely lifting code . . . due to the nature of the uniqueness of our product and user interface, it took a good amount of deliberate studying and digging through our code with the full intention of replicating our product-user experience, functionality, and end results. This product was later launched and heavily promoted by Microsoft with its big marketing budget,” Woon said.

This is not the first time Microsoft has apologized for infringing the intellectual property rights of others.

A month before the Juku allegations, Microsoft apologized for another third-party vendor improperly incorporating open-source codes into a Windows 7 download tool. The tool was developed to allow users to more easily load Windows 7 onto thumb drives. Microsoft subsequently withdrew the tool.

The recent allegations about Microsoft have caught many by surprise given that Microsoft has been a leader in the fight against piracy in China and elsewhere.

The lesson for anyone who hires others to create code or other creative works is the importance of having an agreement in place that requires the code to be original.

In the Juku case, it appears the contractor did not abide by that requirement. But having it in place let Microsoft move swiftly to protect its reputation, and show that, while it may be ultimately responsible, it did not intend or condone the copying. It should also give Microsoft some recourse against the contractor.

Its amusing / ironic / puzzling whenever someone who aggressively tries to protects its own copyright, trade-marks, or other intellectual property finds itself on the opposite side.   In other words, they engage in the very behaviour that they find offensive in others.

The latest example is Vanoc (aka the Vancouver Olympics).  Seems that there are a couple of instances where Vanoc has been accused of trying to acquire rights from others that crossed the line.

See the details on Excess Copyright or Techdirt.